Split Air Conditioner Systems Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

Split Systems Market Analysis

The Split Systems Market is expected to register a CAGR of 4.88% during the forecast period.

The split systems industry is experiencing significant transformation driven by global climate change and urbanization trends. According to research by NASA's Goddard Institute for Space Studies, the Earth's average global temperature has increased by at least 1.1° Celsius since 1880, with projections indicating a further rise of 1.5 degrees Celsius by 2050. This escalating temperature trend has made air conditioning systems transition from luxury items to essential installations in both residential and commercial spaces. The International Energy Agency reports that currently about 2 billion air conditioning units are in operation globally, with residential units accounting for nearly 70% of the total installations, highlighting the crucial role of space cooling in modern infrastructure.

Environmental consciousness and energy efficiency have emerged as pivotal factors shaping the industry landscape. The International Energy Agency projects that the number of AC units in buildings worldwide will reach 5.6 billion by 2050, emphasizing the critical need for sustainable cooling solutions. Manufacturers are increasingly focusing on developing eco-friendly refrigerants and energy-efficient technologies to align with global sustainability goals. For instance, in March 2023, Toshiba announced its latest generation of Variable Refrigerant Flow (VRF) systems operating on lower Global Warming Potential (GWP) refrigerant R-32, demonstrating the industry's commitment to environmental stewardship.

Technological innovation and smart integration are revolutionizing the split systems market. In November 2022, Hitachi introduced a P-series smart wall-mounted split air conditioning unit featuring automated self-cleaning operation and comfort control, incorporating advanced technologies such as image scene camera technology, motion sensors, and WiFi connectivity. The integration of Internet of Things (IoT) capabilities has enabled predictive maintenance, remote monitoring, and enhanced energy management, making split systems more efficient and user-friendly. These technological advancements are particularly significant as they align with the growing smart home trend and increasing consumer demand for connected appliances.

The industry is witnessing substantial investments in manufacturing capabilities and technological development. According to Oxford Economics, the global construction market is expected to grow by USD 4.5 trillion to reach USD 15.2 trillion, creating significant opportunities for split system installations. Major manufacturers are expanding their production facilities to meet the growing demand. For example, in March 2023, Panasonic acquired Systemair AC SAS, Systemair S.r.l., and Tecnair SpA to strengthen its commercial air-conditioning business presence. Similarly, in February 2023, Gradient secured USD 18 million in Series A funding to develop window mini-split air conditioners using heat pump systems technology, demonstrating continued innovation and investment in the sector.

Split Systems Market Trends

Rising disposable income in developing countries is contributing to the growth in the demand for split systems

The increasing disposable income in developing nations has become a crucial catalyst for the split systems market's expansion. According to the National Bureau of Statistics of China, the average disposable income per capita for residents in China reached 36,883 yuan in 2022, showing a nominal increase of 5.0% compared to the previous year and an absolute increase of 2.9% after adjusting for inflation. This rising purchasing power has enabled consumers to invest in premium cooling solutions, particularly split systems that offer superior energy efficiency and advanced features.

Cities in emerging and developing countries have served as economic growth engines over the last two decades, resulting in increased consumption capacity and attracting significant investment from multinational corporations. By 2040, several cities in developing and emerging markets are projected to achieve per capita incomes nearly equivalent to those in developed economies. This economic progression has been particularly evident in the shift towards service sector development and high value-added manufacturing, exemplified by Shanghai's increase in gross value-added from business services from 11% in 2005 to 18% in 2021, leading to a 187% rise in average employee productivity during the same period.

Increase in construction of office and smart homes is expected to increase the demand for split systems

The surge in construction activities across residential and commercial sectors is creating substantial opportunities for split system installations. According to new data from the US Census Bureau, there has been a significant rise in construction spending fueled by an increase in commercial buildings. The demand spans various sectors, from work at airports to light rail and multifamily housing units, driven particularly by recent government initiatives such as the Bipartisan Bill, which has allocated significant funding to chip manufacturing and battery production facilities.

The smart home trend is gaining significant momentum, driving demand for advanced split systems with smart capabilities. According to the Consumer Technology Association (CTA), the revenue from smart home devices in the United States is projected to reach USD 23.5 billion in 2023, compared to USD 19.7 billion in 2018. This trend is prompting manufacturers to integrate advanced features into their split systems. For instance, in April 2023, LG Electronics launched Inverter air conditioning systems with features such as AI+, Hot & Cold, Plasmaster Ionizer++, and LG ThinQ (WIFI ACs) with voice command options. Similarly, in August 2023, Godrej Appliances introduced India's first leakproof split air conditioning unit with Anti-Leak technology, demonstrating the industry's response to evolving consumer preferences for smart, efficient cooling solutions.

Segment Analysis: By Equipment Type

Mini-Split Segment in Split Systems Market

The mini split system segment continues to dominate the global split systems market, commanding approximately 89% market share in 2024. This substantial market presence can be attributed to several key advantages that mini split systems offer, including superior energy efficiency, flexible installation options, and the ability to provide individualized climate control in different zones. Mini split systems have gained particular traction in both residential and commercial applications due to their ability to avoid energy losses associated with ductwork, which, according to industry estimates, can account for up to 30% of energy consumption in traditional systems. The segment's dominance is further reinforced by features such as quiet operation, advanced filtration capabilities, and the increasing integration of smart technologies enabling remote control and automation functionalities.

Variable Refrigerant Flow (VRF) Segment in Split Systems Market

The Variable Refrigerant Flow (VRF systems) segment is positioned as the fastest-growing segment in the split systems market, projected to grow at approximately 9% CAGR from 2024 to 2029. This remarkable growth trajectory is driven by the increasing adoption of VRF systems in commercial and large-scale residential applications, where their ability to provide simultaneous heating and cooling across multiple zones offers significant advantages. The segment's growth is further accelerated by technological advancements, including the integration of artificial intelligence and deep neural network algorithms for optimized system operation. VRF systems are particularly gaining traction in green building initiatives and sustainable construction projects, as they offer superior energy efficiency and reduced environmental impact through precise temperature control and variable capacity operation.

Remaining Segments in Equipment Type

The multi-split and other equipment segments, including in-ceiling cassette systems and floor-mounted split systems, play important complementary roles in the overall split systems market. Multi-split systems offer an optimal solution for facilities looking to condition multiple areas while preserving independent temperature management capabilities, making them particularly suitable for architectural structures where ducted systems are impractical. The other equipment segment, comprising specialized solutions like ceiling cassettes and floor-mounted units, caters to specific installation requirements and architectural constraints, providing valuable alternatives for unique application scenarios where traditional split unit configurations may not be optimal.

Segment Analysis: By Application

Residential Segment in Split Systems Market

The residential segment continues to dominate the global split systems market, commanding approximately 80% of the total market share in 2024. This substantial market presence is primarily driven by the increasing global average temperature and changing climatic conditions worldwide, which have intensified the demand for space cooling and heating solutions in residential spaces. According to the International Energy Agency (IEA), about 2 billion air conditioning units are currently operational globally, with residential units accounting for nearly 70% of the total installations. The segment's strong position is further reinforced by the growing global population, particularly in highly populous regions including China, India, and Indonesia, where rising economic prosperity has enhanced consumers' ability to invest in comfort solutions. The implementation of energy efficiency regulations and the increasing adoption of smart home technologies have also contributed significantly to the segment's dominance, with vendors launching innovative solutions featuring advanced functionalities like AI integration, IoT connectivity, and voice command options.

Commercial Segment in Split Systems Market

The commercial segment is positioned as the fastest-growing segment in the split systems market, projected to experience robust growth of approximately 6% during the forecast period 2024-2029. This accelerated growth trajectory is attributed to the essential role of heating and cooling systems in various commercial establishments, including hospitals, restaurants, schools, hotels, and office buildings, where they are crucial for maintaining optimal working conditions and employee productivity. The segment's growth is being propelled by several key factors, including the increasing focus on energy conservation in commercial buildings, where HVAC systems typically account for about 40% of energy costs. The adoption of advanced technologies such as automated systems, green technology, and smart building solutions is further driving the demand for energy-efficient HVAC split systems in the commercial sector. Additionally, the expansion of commercial real estate developments and the growing emphasis on sustainable building practices are creating substantial opportunities for air conditioning split systems installations across various commercial applications.

Split Systems Market Geography Segment Analysis

Split Systems Market in North America

The North American split systems market demonstrates robust growth driven by the increasing adoption of energy-efficient cooling solutions and stringent government regulations promoting sustainable technologies. The United States and Canada represent the key markets in this region, with both countries showing a strong commitment to environmental sustainability through various incentive programs and energy efficiency standards. The region's market is characterized by a high penetration of smart home technologies and growing retrofit activities in both residential and commercial sectors.

Split Systems Market in United States

The United States dominates the North American split systems landscape as the largest market in the region, holding approximately 95% market share in 2024. The country's market is driven by federal income tax credits and incentives for energy-efficient products, particularly through the Inflation Reduction Act. The market shows strong growth in both residential and commercial sectors, supported by increasing construction activities and renovation projects. The US government's implementation of new efficiency standards and regulations for HVAC systems continues to shape market dynamics, while rising temperatures and extreme weather conditions further drive demand for efficient cooling solutions.

Split Systems Market in Canada

Canada emerges as the fastest-growing market in North America, with a projected growth rate of approximately 5% during 2024-2029. The country's market is experiencing significant transformation driven by extreme weather conditions and an increasing focus on energy-efficient solutions. The Canadian government's emphasis on green building initiatives and energy conservation programs has created a favorable environment for market growth. The combination of rising construction activities, growing household discretionary income, and strong government support through rebate programs and incentives continues to drive market expansion in both residential and commercial sectors, particularly for residential split AC and commercial split AC.

Split Systems Market in Europe

The European split systems market showcases diverse dynamics across its key markets, including the United Kingdom, Germany, France, Spain, and Eastern Europe. The region's market is significantly influenced by the European Union's aggressive carbon dioxide emission reduction targets and energy efficiency regulations. The market demonstrates strong adoption of innovative technologies, particularly in smart building applications and energy-efficient solutions.

Split Systems Market in Spain

Spain leads the European market with approximately 11% market share in 2024, establishing itself as the largest market in the region. The country's dominance is attributed to its climatic conditions and high penetration rate of air conditioning systems in residential sectors. The Spanish market benefits from significant investments in both residential and commercial construction sectors, while the government's focus on energy-efficient building solutions continues to drive market growth. The country's commercial real estate sector plays a crucial role in market expansion, particularly in office buildings, retail complexes, and hotels, leveraging split air conditioning systems.

Split Systems Market in France

France emerges as the fastest-growing market in Europe with a projected growth rate of approximately 3% during 2024-2029. The country's market is driven by strong government initiatives promoting energy-efficient heating and cooling solutions, particularly through its energy sobriety plan. The French market demonstrates significant potential in both residential and commercial applications, supported by robust construction activities and renovation projects. The government's commitment to achieving net-zero emissions and improving energy efficiency in buildings continues to create favorable conditions for market growth, particularly for split type air conditioner systems.

Split Systems Market in Asia Pacific

The Asia Pacific region represents a dynamic market for split systems, encompassing major economies like China, Japan, India, and South Korea. The region's market is characterized by rapid urbanization, increasing disposable income, and growing awareness about energy-efficient cooling solutions. China emerges as the dominant market in the region, driven by substantial investments in residential and commercial construction, along with strong government initiatives promoting sustainable cooling solutions. Meanwhile, South Korea demonstrates the highest growth potential, supported by technological innovation and strong government support for energy-efficient technologies, including ductless cooling systems.

Split Systems Market in Middle East & Africa

The Middle East & Africa region presents unique opportunities in the split systems market, driven by extreme climatic conditions and rapid urbanization. The market benefits from significant investments in construction activities, particularly in commercial and residential sectors. Saudi Arabia emerges as the largest market in the region, supported by rising disposable income and government initiatives promoting energy efficiency. The United Arab Emirates shows the fastest growth potential, driven by sustainable building projects and strong government support for energy-efficient cooling solutions, including AC split systems.