KSA Residential AC Market Outlook to 2028

KSA Residential AC Market Overview

• KSA Residential AC Market was valued at USD 517 million in 2023. The growth is driven by the increasing urbanization and rising disposable income of the middle-class population. Additionally, the harsh climate of Saudi, with temperatures often exceeding 40 degrees Celsius, has heightened the demand for efficient cooling solutions, thus boosting the market for residential air conditioners.
• Key players in the KSA residential AC market include LG Electronics, Samsung Electronics, Gree Electric Appliances Inc., Daikin Industries, and Carrier Global Corporation. These companies dominate the market due to their extensive distribution networks, strong brand presence, and a broad range of product offerings tailored to the climatic conditions and energy efficiency requirements of the region.
• In 2021, LG Electronics, in collaboration with Al Hassan Ghazi Ibrahim Shaker Co., is enhancing its air conditioning production facility in Riyadh, Saudi Arabia. This upgrade involves the integration of advanced robotics and AI technology to boost production capacity and operational efficiency, positioning LG-Shaker to lead the competitive AC market in the region.
• Riyadh, Jeddah, and Dammam are the dominant cities in the KSA residential AC market due to their large population size, high levels of urbanization, and extreme climatic conditions. These cities experience prolonged periods of high temperatures, necessitating the widespread use of air conditioners. Additionally, rapid infrastructure development and the growth of residential real estate in these cities further fuel the demand for residential air conditioning units.

KSA Residential AC Market Segmentation

The KSA Residential AC Market can be segmented based on several factors:

By Product Type: KSA Residential AC market is segmented by product type into window ACs, split ACs, portable ACs, and centralized ACs. In 2023, split ACs held a dominant market share due to their higher energy efficiency and quieter operation compared to window ACs. Split ACs are preferred in modern residential constructions because they offer better aesthetics and do not obstruct windows or external walls.

By Technology: KSA Residential AC Market is also segmented by technology into inverter and non-inverter ACs. Inverter ACs have the largest market share in 2023 due to their energy efficiency, which aligns with the governments energy conservation goals under Vision 2030. Inverter technology allows the air conditioner to adjust its power based on the ambient temperature, resulting in significant energy savings.

By Region: KSA Residential AC Market is segmented into the Central, Western, Eastern, Northern, and Southern regions. The Central region, particularly Riyadh, holds the largest market share in 2023 due to its high population density, extensive urbanization, and economic development. Riyadhs extreme summer temperatures and growing construction activities in both residential and commercial sectors further drive the demand for residential air conditioners

KSA Residential AC Market Competitive Landscape

• Haier Electronics Group: At 2024 Haier Smart Home Middle East and Africa dealer conference in Cairo, Haier emphasized its commitment to the Middle East and Africa, showcasing high-end products tailored to local consumer needs. This included a focus on smart home solutions and innovative air conditioning technologies, which are gaining traction in the Saudi market.
• Toshiba Carrier Corporation: In 2022, Carrier completed its acquisition of Toshiba's global residential and light commercial HVAC business, including Toshiba Carrier Corporation. This acquisition, valued at approximately $900 million, aims to enhance Carrier's position in the rapidly growing variable refrigerant flow (VRF) and heat pump markets, which are crucial for energy efficiency and sustainability initiatives.

KSA Residential AC Industry Analysis

KSA Residential AC Market Growth Drivers:

• Increase in Residential Construction Projects: The residential construction sector in Saudi Arabia has seen significant growth. There are over 5,200 ongoing construction projects in Saudi Arabia, valued at approximately USD 819 billion. Subsequently, the market for residential ACs is set to expand as more housing units are developed, particularly in urban areas like Riyadh and Jeddah, where the climate necessitates effective cooling solutions.
• Rising Temperatures and Climatic Conditions: The demand for electricity in Saudi Arabia peaks during the summer due to air conditioning needs. Electricity generation can reach up to 60 GW on hot summer days, compared to only 23 GW in winter. Each 1 C increase in temperature requires an additional 1.18 GW of electricity generation. These conditions necessitate the use of air conditioners to maintain indoor comfort levels, thereby bolstering the market.
• Increased Awareness and Adoption of Energy-Efficient Solutions:
  Saudi Arabia's total oil production increased by 14% in 2022, reaching 578 million tonnes, although it saw a 7% decrease in the first nine months of 2023. This push towards energy efficiency is not only helping reduce the overall energy consumption of households but also driving the growth of the residential AC market in Saudi Arabia.

KSA Residential AC Market Challenges:

• Supply Chain Disruptions: The global supply chain disruptions have had a lingering effect on the residential AC market in Saudi Arabia. The disruptions led to a shortage of key components like compressors and microcontrollers, resulting in extended lead times and increased production costs for manufacturers. These disruptions have led to price volatility and delays in product availability, affecting both retailers and consumers.
• Regulatory and Compliance Challenges: Non-compliance with these standards can result in fines and the removal of non-compliant products from the market. These regulations, while beneficial for reducing energy consumption, have increased the burden on manufacturers to innovate and adapt, potentially slowing down the introduction of new models.

KSA Residential AC Market Government Initiatives:

• Saudi Energy Efficiency Program (SEEP): Saudi Energy Efficiency Program (SEEP) was launched in 2012 under the auspices of the Saudi Energy Efficiency Center (SEEC). Its primary goal is to enhance energy efficiency across the Kingdom, focusing on three major sectors: buildings, transportation, and industry, which collectively account for over 90% of the country's energy consumption. This will affect entry of energy efficient air-conditioners in the country.
• Vision 2030 Housing Program: The Vision 2030 Housing Program was officially launched in 2016 as part of Saudi Arabia's Vision 2030 initiative. The Vision 2030 Housing Program aims to increase the percentage of home ownership among Saudi families to 70% by 2030. This large-scale construction drive is expected to increase the demand for residential air conditioning units significantly.

KSA Residential AC Future Market Outlook

KSA Residential AC Market is poised for substantial growth over the next five years, driven by a combination of increasing construction activities, government initiatives promoting energy efficiency, and the rising demand for advanced cooling solutions.

Future Trends

• Growth in Smart AC Technology: By 2028, there will be a substantial increase in the adoption of smart air conditioning systems in Saudi Arabia. These systems, which can be controlled remotely and integrated with home automation platforms, will cater to the tech-savvy and energy-conscious consumers in the region.
• Expansion of Local Manufacturing Capabilities: In response to the Saudi governments push for local content and economic diversification under Vision 2030, major AC manufacturers are expected to expand their local manufacturing capabilities. This shift towards local production will not only reduce costs and lead times but also create employment opportunities and contribute to the countrys economic growth.