Heating,, Ventilation and Air
Conditioning (HVAC) Market in the
GCC
July 2012
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Table of Contents
Heating, Ventilation and Air Conditioning (HVAC) Market in the GCC July 2012 ................................................
................................
Chapter 1. ................................................................
................................................................................................
........................................................... 3
Heating, Ventilation and Air conditioning (HVAC) Systems and the GCC ..........................................................
................................
3
Chapter 2. ................................................................
................................................................................................
........................................................... 5
GCC Building Construction and HVAC Market Overview ................................................................
................................................... 5
The GCC and Building Construction Overview ................................................................
................................................................... 5
GCC HVAC Market Overview ................................
................................................................................................
............................................................ 10
Chapter 3. ................................................................
................................................................................................
......................................................... 13
New Technologies in the GCC HVAC Market ................................................................
................................................................... 13
List of Tables
Table 1: Major Building Construction Projects across the GCC (US$ Million), July 2012 .................................. 6
List of Figures
Figure 1: HVAC Demand across GCC Countries (US$ Million), 2011 .................................................................
................................
4
Figure 2: GCC HVAC Systems Market Demand/Size by Country (US$ Million), 2010
2010-2012 ............................ 11
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Chapter 1.
Heating, Ventilation and Air
conditioning (HVAC) Systems and
the GCC
Heating, Ventilation and Air Conditioning (HVAC) systems are defined as technology used to enhance
indoor or automotive environment comfort. Designing of HVAC systems assumes
assum extreme importance in
the in-built
built architecture of medium to large residential bu
buildings,
ildings, office complexes, hospitals and
healthcare centres in order to ensure safe and healthy regulation of temperature, ventilation and humidity
in construction.
Partly owing to the maturity of its construction market and partly to the extreme climatic conditions of the
desert and the growing population with its rising standards of living, GCC constitutes one of the largest
markets for HVAC in the world.
HVAC is the single largest energy-consumer
consumer in buildings. It accounts for almost 60 percent of the total
energy cost in a building. An efficient HVAC system can reduce power consumption by 35 to 40 percent.
These statistics assume importance in the context of the increasing trend in the GCC Construction sector
toward the internationally popular Leadership in Energy and Environmental Design (LEED)
(
certification of
projects through bettering their HVAC design standards. Other important certifications toward a
sustainable construction include the American Society of Heating, Refrigerating and Air Conditioning
Engineers (ASHRAE), also widely adopted by projects in GCC
GCC. Therefore, HVAC systems form an important
component of GCC building construction across its key sectors of commercial, residential, hospitality and
retail.
With construction across countries such as Qatar, UAE and Saudi Arabia moving at a greater pace toward
environmentally sustainable designs, markets in the GCC where sustainability is the norm rather than the
deviation lead the markets for HVAC systems and latest technologies in the field. The ffollowing figure
shows the shares of countries in the GCC in the HVAC market as of 2011.
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Figure 1:: HVAC Demand across GCC Countries (US$ Million), 2011
HVAC Demand across GCC Countries (US$ Million), 2011
Oman
4%
Bahrain
1%
Kuwait
6%
Qatar
13%
Saudi Arabia
51%
UAE
25%
Source: Ventures Middle East Analysis
With demand for HVAC systems estimated at US$ 6.28 billion across the GCC countries, Saudi Arabia with
its extreme climatic conditions, large and growing population and high disposable incomes accounts for the
largest share of more than half of the market for HVAC systems as of 2011, followed b
by UAE in and Qatar,
all of which are considered pioneers and leaders in technology and adoption of sustainable building codes.
As early as 2007, Saudi Arabia was deemed the world’s third largest market for HVAC systems after the
United States of America and India by international analysts. While traditional air
air-conditioning in itself is a
steadily growing market across GCC countries due to its climatic conditions,, new technologies are being fed
into the Saudi and UAE markets, which are highly receptive to such innovations, fuelling growth in the
HVAC technologies adopted across these countries.
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Chapter 2.
GCC Building Construction and
HVAC Market Overview
With demand for HVAC systems primarily stemming from building construction, the health of the
construction sector in the GCC and the projects ongoing are a stellar indicator of the growing potential of
HVAC systems in the region. HVAC systems are an important part of the Mechanical, Electrical,
Electr
and
Plumbing (MEP) market comprising 24 percent of the MEP value, which are an essential and ongoing
component of a building construction market and follow the business cycles associated with the
construction sector closely.
A brief overview of the GCC and its building construction market in the GCC provides a bird’s eye view of
the market potential of HVAC systems in the GCC.
The GCC and Building Construction Overview
While not immune to the global economic slowdown and the downturn in business cycles after a soaring
property boom between 2007 and 2009, GCC markets were hit by a crash in 2009 in real estate markets.
However, these countries were shielded from the worst
worst, by the prudent fiscal policies of the government
and ambitious diversification plans that resulted in heavy government spending across sectors to help
revive faltering building construction markets.
Recovery across GCC markets in 2010 and 2011 was stead
steady though uneven, with varying focus on segments
across different countries of the region. The downturn also brought about a note of caution amongst the
erstwhile zealous spending countries and their ambitious diversification plans as prudent regulations were
we
introduced to prevent financial and quality breakdowns in the speedy build up of projects.
The Arab Spring too,, far from adversely affecting the GCC economies, helped shift focus to core areas such
as affordable housing and social infrastructure in cou
countries
ntries such as Saudi Arabia, Bahrain and Kuwait. Qatar
emerged as the rising star of the GCC, having witnessed unprecedented growth on the back of its Nation
Vision 2030 strategy alongside its winning bid to host the World Cup 2022 football event that sped up its
construction plans in line with its National Vision. UAE
UAE, after making a cautious recovery from the steep fall
in its property markets, emerged with renewed hopes of a more stable and cautious real estate market
market,
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
with better regulatory checks whilee Oman has plans to ride th
thee tourism wave to achieve its growth targets
while shielding itself from the economic slowdown. Bahrain, the worst affected of the GCC countries by
the Arab Spring and the global financial meltdown due to its place as a global ffinancial
inancial centre, is however,
still coping with its aftermath and its construction market is making a slower recovery, helped largely by
the vast government spending on social infrastructure.
Commercial and residential real estate markets across the GCC now command prices and rents at a
premium over their international counterparts as they are now being perceived as safe havens for
investors, amid the prevailing dismal global socio-political conditions,, the regional unrests of the Arab
Spring and
d the European economic turmoil
turmoil.. Building projects worth over US$ 57.8 billion were awarded to
contractors in 2011 across all the building sectors including residential, commercial, hospitality and retail
and is likely to reach US$ 65.5 billion in 22012. These strong growth signals have also prompted analysts to
revise growth estimates for the GCC region upward, citing fundamentals such as its strong and consistent
economic growth, political stability amidst unrest in its neighbourhood, strong oil pri
prices boosting their
revenues, clear-cut
cut government plans and vast spending to fuel the growth across its non
non-oil sectors, for
the revision. The following is the list of top building projects across the GCC as of July 2012:
Table 1: Major Building Construction Projects across the GCC (US$ Million), July 2012
Project
Name
Country
Al Khairan Kuwait
Residential
City Project
Masdar City UAE
in Abu Dhabi
South Obhur Saudi Arabia
Project
Nebras
Aviation City
UAE
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Client
Consultant
Public
Authority for
Housing
Welfare
(PAHW)
Masdar (Abu
Dhabi Future
Energy
Company)
Gulf
Consult; Not Appointed
Atkins; Kuwait
Rayadah
Investment
Company
Strata
Contractor
Value
(US$
Million)
Status
Design
27,000
Flack & Kurtz
Consulting
Engineers; ETA
Ascon;
Abu
Dhabi;
Transsolar; WSP
Group;
Abu
Dhabi
Sulaiman
Al
Khorashi Office
Al
Ahmadiah
Contracting;; Hip 22,000
Hing Contruction
- Hong Kong
Construc
tion
-
Design
-
-
15,000
10,000
Concept
Stage
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Project
Name
Country
Client
Ghantoot
Green City
UAE
International
Capital
Trading LLC
-
Makkah
Gate
Cultural
Oasis
Saudi Arabia
-
New
Doha
International
Airport
Qatar
Al Balad
Ameen
Company for
Urban
Development;
Makkah
Municipality;
Sumou Real
Estate
Company;
Makkah Gate
Company
NDIA Steering
Committee
Barwa
Al Qatar
Khor Project
- Urjuan
Riyadh East Saudi Arabia
Sub Center
King Faisal Saudi Arabia
University in
Al Ihsa - Staff
Accommoda
tion - Phase
2
Kingdom
Saudi Arabia
Riyadh Land
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Consultant
KEO
International
Consultants; Abu
Dhabi
Al -
Contractor
Value
(US$
Million)
Status
Design
10,000
Design
10,000
-
Various
Contractors
10,000
Construc
tion
Barwa
Real KEO
Estate
International
9,600
Company
Consultants;
Qatar
Hamed
& Ahmed
8,000
Mohammed Al
Mozainy Real
Estate Co.
King
Faisal Arch-Centre for Al
Arrab
University
Architecture & Contracting
7,012
Engineering
Company
Consultant;
Saudi
Design
Kingdom
Holding
Company
Design
Omrania
Associates
(O&A);
Saudi Arabia
&
-
Tender
for
Construc
tion
Contract
Construc
tion
7,000
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Project
Name
Country
Client
Consultant
Boubyan
Island
Development
Kuwait
Ministry
of
Public Works
(MPW);
Kuwait; Mega
Projects
Agency (MPA)
Hellmuth Obata
Kassabaum
(HOK);
Gulf
Consult;
Mouchel; Kuwait
Al Ghadeer UAE
at Saih As
Sidirah
Sorouh
Estate
North
Bahrain
Bahrain New
Town
Project
Main File
Muscat
Oman
Ministry
Works
Housing;
Bahrain
International
Airport
Expansion Phase 1
Lusail Phase Qatar
II - Fox Hills
Energy City Qatar
Project
Phase 1
Viva Bahriya Qatar
Sohar
Zone
Free Oman
Khor Dubai
UAE
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Contractor
Value
(US$
Million)
Hyundai
Engineering
& 6,640
Construction
Company
/Mohammed
Abdulmohsin Al
Kharafi & Sons
Real Sun
Jin Construction
Engineering
General
5,400
(South Korea)
Contracting
of
&
Ministry
of
Transport &
Communicatio
ns
-
-
Status
Construc
tion
Construc
tion
Design
4,500
COWI
&
Partners; Oman;
Larsen
Architects
Qatari
Diar Real
Estate
Investment
Company
(QDREIC)
Energy City
PFC Energy
TAV
Construction;
4,000
Turkey;
Consolidated
Contractors
International
Company (CCC);
Oman
3,800
Construc
tion
-
Design
Design
3,000
United
Development
Company
(UDC)
Sohar
International
Development
Company
Dubai Culture
and
Arts
Authority
SRSS
Associates
& Various
Contractors
Mott
MacDonald;
Oman
Premier
International
Project
Kling
Dubai
-
Consult;
2,000
Construc
tion
2,000
Construc
tion
Design
1,907
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Project
Name
Country
Janayen Al Bahrain
Hamala
Housing
Development
Jaber
Al Kuwait
Ahmed
Al
Sabah
Hospital
New
Oman
Terminal at
Salalah
International
Airport
Kuwait
Kuwait
Cancer
Control
Center
Expansion
20,000 Low- Bahrain
cost Housing
Project
in
Bahrain
Phase 1
Amphibious Qatar
1000
Mutrah
Redevelopm
ent
Oman
Eco - Resort Oman
at Ras alHadd
Client
Consultant
Contractor
Al Salam Bank
Manara
Developments
Company
Abdulla H. Al
Mutawa
Sons 1,325
Group (AMSG);
Saudi
Construc
tion
Ministry
istry
of
Health;
Ministry
of
Public Works
(MPW)
Ministry
of
Transport
sport &
Communicatio
ns
Gulf
Consult; Kuwait
Arab
Langdon Wilson; Contractors
1,057
Kuwait
Construc
tion
COWI
&
Partners; Oman;
Larsen
Architects
Construc
tion
Ministry
Health;
Kuwait
Value
(US$
Million)
Galfar
Engineering
& 760
Contracting;
Oman; Larsen &
Toubro
of Pan
Arab Alghanim
Consulting
International
597
Engineers
General Trading
(PACE)
& Contracting
Status
Construc
tion
Ministry
of
Housing;
Bahrain;
Naseej BSC
-
Chase
Perdana
Sdn. Bhd.
550
Construc
tion
Seaquest
Marine
Technology
Plc
Muscat
Municipality;
Haya Water
(OWSC)
Ministry
of
Tourism;
Oman; Qatari
Diar
Real
Estate
Investment
Company
(QDREIC)
Giancarlo Zema
Design Group
500
Concept
Stage
-
500
Concept
Stage
Dar
Al
Handasah;
Oman;
Spillis
Candela DMJM
-
Design
300
Source: Ventures Onsite MENA Projects Database www.venturesonsite.com
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
GCC HVAC Market Overview
The HVAC system mainly comprises five main components, which have been together considered for the
computation
tation of demand /market size of HVAC systems in the GCC. These include the following:
 Air Handling Unit (AHU): These are devices used to condition and circulate air as a part of the HVAC
system. It comprises a large metal box with a blower, heating or cooling elements, filter racks or
chambers, sound alternators and dampers
 Fan Coil Unit (FCU): This compris
comprises
es a small terminal unit with only a blower and a heating and/or
cooling coil (heat exchanger)
 Chiller: This is a machine that removes heat from a liquid via a vapour compression or an absorption
refrigeration cycle. This liquid is subsequently circulated through a heat exchanger to cool air or
equipment as required
 Pump: It forms the centrifugal core of any HVAC system, supporting the operation of chillers, boilers,
cooling towers, water systems, and water distribution systems
 Cooling towers: These are heat removal devices used to transfer process waste heat to the
atmosphere
As HVAC systems account for as much as 60 percent of a building’s energy costs, the distribution of energy
between these components assume significance in the design and iinstallation
nstallation of an HVAC system. The
percentage of distribution of energy costs are Chillers 52 percent, AHU 22 percent,
percent Pumps 22 percent and
Cooling Tower 4 percent. The market for HVAC systems was estimated at US$ 6.2 billion as of 2011 and
growing at an average rate of over 3 percent annually
annually,, is divided into district cooling which comprises a
third of the market and the remaining two
two-thirds
thirds is for air conditioning equipment.
equipment There is a thriving
market for HVAC components and spares as components are sub
subject
ject to wear and tear and replacement
over a period of time and given the maturity of the building construction market and the prevalence of
HVAC systems in the GCC, this is a market that also offers ggreat potential. The following figure represents
the estimated
timated and forecast demand for HVAC systems by country in the GCC between 2010 and 2012.
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Figure 2:: GCC HVAC Systems Market Demand/Size by Country (US$ Million), 2010
2010-2012
7000
GCC HVAC Systems Market Demand/Size (US$ Million) by Country, 2010-2012
2010
HVAC Systems Demand (US$ Million)
6000
5000
4000
3000
2000
1000
0
2010
2011
Saudi Arabia
UAE
Qatar
Oman
2012
Kuwait
Bahrain
Source: Ventures Middle East Analysis
Driven by the four key pillars common to most GCC markets namely, growing and affluent population
fuelling demand, extreme climate making HVAC more of a necessity than a luxury, a highly resilient and
fast adaptive construction market receptive to the latest technologies ccausing
ausing prices to be driven down for
components, and large scale diversification programmes leading to mushrooming of new businesses, the
HVAC market in the GCC is likely to recover from the past gloom passed on by the construction slump of
2009 and 2010 and
d grow at a steady pace in 2012 as against 2011. Saudi Arabia,
Arabia the world’s third largest
HVAC market, has the largest share of the GCC HVAC market and is likely to continue to grow rapidly,
rapidly
spurred by the massive government spending on mega projects, social housing
housing, and educational
development schemes that includes construction of 13 new universities between 2010 and 2015. The
recovery of the UAE construction markets, the traditional testin
testingg ground for new technologies in the HVAC
market, is also a positive sign heralding growth for the GCC HVAC market
market, as also the ambitious plan to
host the World Cup 2022 Football event by Qatar
Qatar, which involves construction of eco-friendly
eco
stadia,
environmentally
entally sustainable cooling systems for its stadia, hotels, commercial and residential complexes to
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GCC
July 2012
accommodate players, organizers and tourists is another driver attractive enough for HVAC manufacturers
to watch out for in the coming years.
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Chapter 3.
New Technologies in the GCC
HVAC Market
For a highly evolved construction market with demand from a highly affluent population and government
spending heavily on mega projects, air
air-conditioning
conditioning has gradually moved beyond simple air-conditioning
air
systems for
or households into more intricate and sustainable systems that cover entire buildings and use
technologies such as Variable Refrigerant Flow (VRF) which have evolved into advanced air conditioning
systems that provide customizable temperature control funct
functions
ions for each user within a building.
In the GCC, building management systems focus on energy efficiency and sustainability as the key
operatives for technologies adopted in HVAC systems. Variable Speed Drives (VSD) and Variable Air
Volumes (VAV) are other
er commonly used technologies in HVAC systems. VSDs are used to regulate the
speeds of HVAC systems that use less than its installed cooling or heating capacity when required resulting
in energy savings and efficient part load operation and operating cost
costs.
s. An example of a green project using
VSDs to save power is that of Mecca’s Holy Mosque in Saudi Arabia.
Another popular technology in the GCC is that of evaporative air-conditioning
conditioning as against traditional
refrigerated air conditioning that consumes 20 percent less energy than the traditional air conditioning
technology. The technology has currently been introduced only in UAE markets in a number of projects
such as Al Wasl vehicle testing centres
centres, large commercial kitchens for hospitality and
a catering companies in
Ruwais, the outdoor dining area for Fenyala Restaurant at Qanat Al Qasba
Qasba, the Lucy switchgear
manufacturing plant, RAK Ceramics’ kiln area
area, leisure and heritage destinations like the Sharjah Heritage
area successfully owing to the extremely hot climatic conditions suitable for this technology.
Heat Recovery Ventilators (HRV) are another effective technology adopted in GCC HVAC systems that aid in
making mechanical ventilation more cost effective by reclaiming energy from exhaust airflows.
air
Using heat
exchangers to reclaim hot or cool incoming fresh air, HRVs help reclaim 60 to 80 percent of the conditioned
temperatures that would otherwise have been lost. Thereby, the cooling loads on HVAC systems in climatic
conditions such as the Gulf region are significantly reduced and moisture is also transferred by these
systems from the humid outdoor air stream in summer to the exhaust air stream.
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Heating, Ventilation and Air Conditioning (HVAC) Market in the
GCC
July 2012
Heat recovery wheels are yet another energy conserving technology that use an aluminium wheel coate
coated
with silica gel that transfers moisture through absorption. As the wheel rotates, it will absorb the hot air
from the outside through the silica gel and cool it to lower temperatures enabling transfer to AHU’s
subsequently with a significant savings in eenergy
nergy consumption. This technology meets ASHRAE ventilation
and energy standards.
Energy conservation is again achieved with the Enthalpy control technology that redirects cool outside air
into the system when the outside temperature is lower or more favou
favourable
rable than inside the building. The
Mirdiff City Center Project in UAE is one example of the use of the Enthalpy control technology in its HVAC
system that has helped in significant electricity savings.
The world’s second largest tower Burj Dubai has also used an advanced district cooling technology
involving a thermal ice storage facility that produces tonnes of ice slurry in off peak hours such as the night
that saves electricity costs. Thermal energy storage using ice makes use of large scale heat from fusion of
water, while using a fraction of the space needed by conventional cooling equipment for storage.
The ultimate aim of a HVAC system is to optimize energy efficiency and reduce costs of operating a
heating/ cooling and ventilation system by as much as 35 to 40 percent and achieve green building
standards of LEED and ASHRAE which are achieved through these latest technologies.
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