Global

2024 Construction Spotlight: Global Hvac Industry Report

May 30, 2024

The construction industry is growing significantly worldwide, especially in developing countries. As a result, there is a rising demand for Heating, Ventilation, and Air Conditioning (HVAC) systems in residential, commercial, and industrial sectors. This growth is being driven by ongoing urbanization and infrastructure development.  

The global HVAC systems industry is forecast to grow at a compound annual growth rate (CAGR) of 6.4% from 2024 to 2031. The market was valued at $218.32 billion in 2024and is on pace to reach $338.62 billionby 2031.

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Market Drivers 

The HVAC sector is seeing significant growth due to increasing demand for energy-efficient solutions spurred by strict regulations and new sustainability initiatives. New technologies brought on by the Internet of Things (IoT) drive growth in the HVAC market by improving operational efficiencies and lowering business costs. These innovations include smart thermostats, advanced sensors, and cloud-based HVAC management systems. Additionally, by incorporating artificial intelligence (AI) and machine learning, companies can improve their performance by offering predictive maintenance and personalized comfort solutions. This boosts market demand and increases profitability. 

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Market Segmentation 

The cooling and air conditioning segment continues to dominate the HVAC market. HVAC installation and repair account for around 60% of the industry revenue. 

In the U.S., HVAC companies typically serve new construction, retrofitting, and residential homeowners’ needs, as well as those of commercial and government businesses and industrial and retail properties. 

Residential HVAC services account for the largest share of the market. Commercial HVAC services hold the second largest share, with over 30% of total HVAC sales. Industrial HVAC services are the third-largest segment, accounting for 20% of total HVAC sales.

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Key Industry Trends 

Smart HVAC Systems 

The ever-evolving IoT enables home appliances to connect, communicate, and be controlled by smartphones. HVAC systems can now alert owners when they need repair or routine maintenance. An innovative HVAC system can also enable homeowners to control the temperature of a room or workspace and control aspects such as lighting, humidity, and fan speeds to create an ideal level of comfort. 

Indoor Air Quality 

Indoor air quality devices are becoming more popular with many homeowners who suffer from allergies and congestion. These devices remove mold, pet dander, dust mites, and pollen. Some of these solutions use UV light to reduce odors and indoor contaminants. Sensors or monitors are also being used to track indoor air pollutants. 

Solar Heating Systems 

Solar heating systems use solar energy to warm fluids, which then heat the air. This helps to reduce energy costs and minimize environmental impacts. 

Geothermal HVAC Systems 

A geothermal HVAC system uses an earth loop comprising underground pipes that heat and cool a structure. Even as the weather changes, the average ground temperature stays relatively consistent, and geothermal HVAC systems use this consistency to heat and cool buildings. This type of system is more complex for HVAC technicians to design and can be more expensive to install than other renewable energy solutions.  

Sustainable Building Design 

As new constructions are being designed to be greener and focus on energy efficiency, HVAC efficiency is a key part of the design of new homes and buildings. Both heating and cooling systems require a great deal of energy, so HVAC professionals must be very focused on cutting down on energy consumption costs. 

DeVAP HVAC 

Known as the future of air conditioning, DeVAP systems use liquid evaporative desiccant along with evaporative coolers to cool a room. The cost savings are the number one benefit of this new DeVAP HVAC technology. 

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By Geographic Region 

The Asia-Pacific region has the largest share of the global HVAC market due to the area’s rising disposable income and growing awareness of more energy-efficient solutions. There is also an increasing population and a thriving real estate industry in the region, and further growth is driven by the popularity of intelligent buildings and government initiatives that promote energy-efficient, cost-saving systems.

M&A 

The HVAC industry is set to experience growth as it caters to new industrial applications and plays a crucial role in maintaining essential assets and infrastructure. Last year, innovative technologies were less of a priority in deals while the sector focused on cost-saving energy solutions and the shift from analog to digital equipment, also supported by increased government spending. However, this year, merger and acquisition activity increased by 41.7%.3 Not only are more deals being made, but leading public HVAC companies are also investing in the newest HVAC equipment technologies, opening up new markets.  
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Advanced technology has led to the rise of industrial applications for HVAC parts and systems in various sectors, such as healthcare, aerospace, semiconductors, and data centers. Due to the high power demand, these industries require precise and stable environmental controls to manage their assets effectively. The heat generated by advanced electronics equipment needs to be dissipated, and exposure to extreme temperatures can result in expensive product degradation and failures. As a result, the demand for industrial HVAC applications is rapidly increasing. Additionally, government policies promoting domestic manufacturing indirectly contribute to the market for these environmental controls. 

The HVAC equipment sector saw a total of 34 deals announced or completed so far this year. Private strategies have continued to be active in the sector, with ten deals completed.3 Private equity acquisitions have also been on the rise, with eight financial acquisitions completed so far, marking a 33.3% increase year-over-year. Private equity add-ons have focused on enhancing product mix and expanding geographic reach rather than making significant, transformative investments in technologies and new markets.3 Strong gross margins and growing demand have led to competitive M&A pricing in the HVAC equipment sector.   

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Data centers and crypto mining facilities are notorious for generating substantial heat. This issue has only worsened due to the increased demand and advancements in artificial intelligence, machine learning, and cryptocurrency. To tackle this problem, HVAC equipment companies have been working hard to develop innovative cooling solutions. To keep up with the changing needs of the industry, major public companies have been resorting to mergers and acquisitions. This trend is expected to continue, leading to a steady flow of transactions shortly. Public strategies have already ramped up their acquisition activity to meet the rising demand. 

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