LONDON — The global HVAC market is forecast to post a compound annual growth rate (CAGR) of close to 7 percent by 2020, according to the latest report from Technavio. The research study covers the present scenario and growth prospects of the HVAC market from 2016 to 2020.
Technavio’s analysts highlight the following four factors that are contributing to the growth of the market:
- Increased construction activities.
- Growing replacement demand in developed countries.
- Need for energy-efficient HVAC systems.
- Developing infrastructure in emerging countries.
INCREASED CONSTRUCTION ACTIVITIES
The report states that development in the construction industry plays a significant role in boosting the global HVAC market. New construction in the residential, commercial, and industrial sectors has increased the demand for HVAC systems, thus generating high revenue for the market. Innovations in building design and increased focus on energy efficiency have created an opportunity for HVAC manufacturers to increase their market foothold.
GROWING REPLACEMENT DEMAND IN DEVELOPED COUNTRIES
The growing awareness of reducing operating costs, increasing energy efficiency, and taking advantage of favorable government incentives has spurred demand for replacing existing HVAC equipment in the U.S., the UK, Germany, and Japan. Technavio analysts believe that 50 percent of growth in the HVAC market in these countries will stem from replacement demand.
Though the replacement of old HVAC systems has increased, a decline in HVAC equipment sales in the short term is expected. Technavio notes that federal tax incentives targeted at ensuring efficiency in HVAC systems installed in the residential market expired in 2014. As a result, many end-users replaced their HVAC systems ahead of schedule. Therefore, the pool of units that needs replacement will be smaller, reducing sales in the short term.