In the wake of the pandemic, the HVACR market is undergoing a significant evolution, driven by shifting customer and stakeholder preferences. The change presents new opportunities for businesses, including for the HVACR accessories sector of the industry. Manufacturers of HVACR accessories are adapting to the shifting landscape by employing strategic approaches to gain a competitive advantage in the GCC region.
According to a research report published by Expert Market Research, the key drivers of the HVACR industry include the rising application of HVAC systems in buildings, the expanding construction sector, the growing need to ventilate residential structures, and rapid industrialisation and urbanisation. Shailesh Lavnis, Regional Key Account Manager – Middle East & Egypt, Sanhua International Europe, says the post-pandemic phase saw a significant surge in demand for HVACR accessories, as economies were recovering in the GCC region. He adds, “The approximate size of the region’s HVACR accessories (excluding compressors) market in the GCC region is around USD 10 million, and two-thirds of the market is focused on Saudi Arabia and the UAE in the GCC region.” Elaborating, Lavnis says that as the market faced challenges in 2022, due to supply chain disruptions, material availability became an important differentiator. He adds that many companies, including Sanhua, addressed the surge in demand with standard lead time and turned this into an opportunity to acquire new customers and markets. He adds that the crisis also created opportunities to introduce new technologies, such as Electronic Expansion Valve (EEV) kits, which could significantly impact energy-efficiency efforts in new markets and territories.
Weighing in, Salah Abdelghany – General Manager, Castel Gulf, says the HVACR industry in the GCC region is on an upsurge, and it can be attributed to the new developments and expansion plans that come on the sidelines of strategic initiatives such as Saudi Vision 2030 and Dubai 2040. Abdelghany also agrees with Lavnis on the spike in demand for HVACR accessories. He says that Castel has noticed a huge demand for accessories, on the back of an immediate return to the economic situation, as was during the pre-pandemic days, or even better. Abdelghany points out that one of the most significant changes has to do with the use of new natural refrigerants, which has meant substituting some of the traditional mechanical valves with electronic ones to guarantee energy saving and clean ambience. “We at Castel have introduced some solutions to the market and conducted seminars to introduce electronic components, which are suitable for new refrigerants, HFO and CO2 that guarantee better performance and impressive energy efficiency.”
In the UAE, Saudi Arabia and the rest of the countries in the GCC region, the growth of HVACR accessories is propelled by several factors. Moreover, the new major projects in the GCC region are also likely to create a spike in the demand for HVACR accessories. Lavnis says the commercial and residential projects within the giga projects in Saudi Arabia are significantly contributing to the rise in demand for HVACR accessories. “In the rest of the GCC region countries, various factors drive growth, such as residential projects in Kuwait, and commercial, refrigeration and retrofit projects in the UAE and Qatar, among others,” he says.
For his part, Abdelghany says, investments in the real estate sector, aimed at attracting foreign investors and international industrial companies with local production, have led to an increase in demand for HVACR components. This upward trend, he adds, has prompted companies like Castel to invest in the region by establishing their commercial branch with local stock in the Free Zone. “This strategic move ensures a high level of service and support for the entire region,” he says.
Moving forward, Abdelghany says manufacturers of HVACR accessories are keen to introduce new products and solutions to meet the demand for energy-efficient products. Adding to the discussion, Lavnis says countries in the GCC region are increasingly adopting environmentally friendly solutions, such as Greentech components, natural refrigerants, like R290 and CO2, or AC systems with inverter technology. “This is also in response to regional regulations aimed at reducing carbon footprint, energy consumption and increasing system efficiency,” he says.
Abdelghany adds that the highly competitive nature of the market also calls for products that are high in quality and meet local regulatory requirements and standards. He emphasises that all products at Castel go through several tests during the production stage to ensure their quality. Joining the discussion, Lavnis mentions that international and domestic safety certificates, such as CQC, CE, TüV, UL and VDE, and certifications by regulatory bodies like Saudi Standards, Metrology and Quality Organization (SASO), and the Emirates Authority for Standardization and Metrology (ESMA) are in place to ensure the quality of HVACR accessories.
Though the HVACR accessories market is on an upward surge, the market also faces challenges ranging from cash flow issues to workforce concerns and supply chain disruptions. Lavnis says cash flow issues are negatively affecting all stakeholders, resulting in delays in project completion and further disruptions. “There has been a slowdown observed since the beginning of 2023, as the market stabilises from the surge of 2022, and I believe that low demand and cash flow issues will continue to affect the market in 2023,” he says. To tackle this issue, he emphasises the importance of ensuring the fastest lead time, reasonable price stability and offering payment plans to partner, resulting in closer partnerships and brand loyalty. Weighing in, Abdelghany says the HVACR accessories market also faces challenges in terms of a lack of awareness of new technologies among installers. These need to be addressed on an urgent basis for manufacturers to exploit the opportunities that are emerging and evolving in the landscape.