Market Trends of United Kingdom Commercial HVAC Industry
Heating Equipment is Expected to Grow with Significant CAGR
- Heating equipment will gain traction in commercial buildings in the coming years. In the commercial sector, heating equipment is utilized in various settings, including restaurants, residential lodges, shopping complexes, and offices. Heat pumps are preferred for commercial properties, offering advantages that exceed those of traditional heating and cooling systems. These advanced technologies enhance energy efficiency, reduce operational costs, and support environmental sustainability and decarbonization efforts.
- Commercial properties can reduce carbon footprint and enhance sustainability by adopting heat pumps. This strategic move not only improves efficiency and reduces costs but also establishes these properties as leaders in the transition to a more sustainable energy landscape.
- Commercial heat pumps find diverse applications in various property types, serving many purposes. The surge in commercial heat pump adoption is set to receive a significant push, primarily driven by heightened government initiatives. For instance, the UK government actively promotes heat pump technology as a green alternative to traditional fossil fuel boilers in commercial setups. To smoothen this shift, the UK offers an array of programs designed to aid companies in transitioning to heat pump systems.
- In May 2024, MCS reported 4,849 installations of air-sourced heat pumps in the United Kingdom, marking the second-highest month on record. The record was surpassed by March 2022, which saw a surge in installations to meet a grant funding deadline, totaling 6,335 units. In May 2024, installations of MCS-certified air-sourced heat pumps saw a significant 64% increase from the same period in 2023. Notably, 2023 marked a record high, with 36,799 air-sourced heat pumps installed yearly.
- Government initiatives and subsidies boost the segment’s growth. Concurrently, continuous research and development endeavors are yielding cutting-edge heat pump technologies that boast enhanced efficiency and cater to the specific requirements of end users. Manufacturers are diligently designing economical heat pumps to fulfill the requirements of consumers.
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Commercial Buildings End-Users Hold Signficant Market Share
- The commercial buildings segment is expected to witness significant growth in coming years owing to ongoing construction activities and increasing demand for air conditioning, heat pumps, and other HVAC systems.
- After a challenging 2023, the commercial property sector is experiencing a resurgence in investment activity. In 2023, the UK's total deal volume significantly lagged behind the 10-year average of EUR 53.4 billion (USD 67.6 billion). However, the fourth quarter of 2023 indicated a recovery, with a 14% increase quarter-on-quarter. This positive trend has continued into 2024, with both activity and deal volumes rising across the country. This growth is occurring despite ongoing geopolitical uncertainties, aided by easing inflationary pressures and the potential for future interest rate cuts.
- Leading companies are constantly investing in introducing various products catering to the demand for these heating systems in the commercial buildings segment. For instance, in November 2023, Daikin recently disclosed information regarding two upcoming VRV 51) heat pump systems scheduled to be released in the first half of 2024. These new systems, namely the Mini-VRV and the Top-blow series, are designed to cater to the growing demand for decarbonization in commercial buildings. Daikin is further enhancing its product portfolio to support the shift toward energy-efficient and more sustainable solutions. Such vendor activities are expected to increase the market’s potential.
- The common commercial applications of Ductless mini-split air conditioners include office spaces attached to unconditioned warehouses or in the lobbies of commercial buildings. Moreover, mini-splits are smaller in size and are flexible for zoning or heating and individual cooling rooms. Such benefits are likely to propel the market’s growth within the commercial segment.
- HVAC system applications have been growing in popularity among commercial building owners for the past few years. The commercial real estate market grows at a rapid rate, which is expected to create significant opportunities for HVAC systems. The European commercial real estate market was projected at over USD 9 trillion in 2023, according to The European Public Real Estate Association, with Germany, the UK, and France together accounting for more than 50% of the total market.
- Ductless mini-split air conditioners also have several potential applications in commercial buildings. Commercial buildings are most likely large and need substantial amounts of energy to heat and cool the areas, but they face issues due to the unavailability of ducts. These systems are also good options for small apartments and room additions, where spreading or installing distribution ductwork for a heating system and central air conditioner is not feasible. Such benefits are expected to augment the adoption of ductless mini-split air conditioners in commercial spaces.
