2019 was a good year in the Middle East countries with many large projects delivered, but the beginning of 2020 has seen a reduction in projects mainly due to the economic uncertainties related to the decreasing oil revenue. In addition, Covid-19 pandemic massively reduced income from tourism and transit trade as well as from local consumption. The Middle East BACS market is expected to feel the impact and fall by 19% in 2020, so more than the global average, and is not expected to return to 2019 sales level before 2024, but much depends on the developments in oil prices.
The UAE has seen sales of BACS products decrease by 22% in 2020 mainly affecting field devices and controllers while sales of software experienced a less significant decline.
The market is expected to show moderate growth 2021 followed by a further improvement in 2022 and 2023, but overall representing a slow recovery. Retrofit and refurbishment is going to be important over the next couple of years with occupiers upgrading their buildings and installing software and products to make the buildings safer, monitoring occupancy and reducing cost by being more energy efficient and increasing remote access to building service equipment.
The Saudi Arabian market for BACS is expected to decline by 17% in 2020 and the biggest impact is anticipated in sales of field devices, followed by controllers.
The forecast is for a slow recovery with moderately yearly increase over the forecast period, reaching 2019 sales level in 2024. Hospitality and retail were severely affected by Covid-19 with most projects being delayed or cancelled and several large religious projects were on put on hold. However, there is currently big demand in Healthcare, mainly from hospitals.
There are many projects in the pipeline such as hospitality, transport, including airports, and warehousing as well as ambitious plans to build several smart cities, but start dates remain uncertain.
AC market performance
The major AC markets in the Middle East; Saudi Arabia, UAE, Iran, Oman, Kuwait and Qatar had been impacted negatively from the pandemic. The biggest two AC market data was updated by BSRIA in September to assess the first half of the year and update its forecast up to 2024.
The Saudi air conditioning market is expected to decline by 5% in 2020 compared to previous year expectations of 1% contraction in volume terms. Contraction was deeper in the chiller market compared to splits systems, which was partly down to people buying air conditioning before the VAT rate increased from 5% to 15% in July this year. The performance in the chiller market varied by compressor depending on the available projects and the competition; VRFs continues to erode the scroll chiller projects.
In the UAE, first half 2020 has seen as much 50% drop-in air-conditioning sales during lockdown, with the ease of lock-down the market started the pick-up and BSRIA expects full-year to contract by 10% in volume terms. In the country, replacement of ducted splits with mini VRF (<20kW) in villa projects continues as VRFs offer much quicker and easier installation compared to ducted split systems. The prices of VRFs has been coming down making them more affordable.
Just like everywhere else around the world, the recent health crisis triggered by the pandemic has brought the debate on IAQ from the HVAC industry in the Middle East too. The claim that a badly designed ventilation system in a public space could facilitate the viral contagion among the occupiers, has caused anxiety among the general public and sparked a renewed interest in IAQ facility upgrades engaging building owners as well as operators. The urgency of enhancing the IAQ solutions prompted by the health risk associated with the Covid-19 spread represents a challenge for regulators and specifiers, a cost for building owners and an opportunity of product development for the HVAC manufacturers.
Some of the strategies that are considered are redesigning lay-outs, zonal HVAC controls, dilution ventilation, VRF with DOAS (100% fresh air), cleaning of air ducts, filtration, ultraviolet germicidal irradiation (UVGI), smart sensors and smart controls etc., Utilisation of some of these strategies will depend on cost, time and knowledge from the building owners, service and maintenance contractors and building services engineers.
The consequences of this transformation on the HVAC industry are still hazy. Ventilation and air conditioning companies are developing new solutions and working in partnership with control suppliers, specifiers and regulators specially, to resolve the apparent incongruity between efficiency and IAQ. The process is in its infancy and is confined to the geographical context of the developed countries. Nevertheless, it is clear the trend will continue even when the Covid-19 emergency is finally tamed. This trend will refocus the attention of the specifiers of commercial buildings widening their concept of sustainability in construction from a restricted reference to efficiency confined to cost and carbon emission containment to a wider target which includes health, wellness and workers productivity.
Middle East Air Conditioning, Pre and post Covid forecast, by volume