Published On: March 2018
How the present scenario looks like?
Currently, the market for HVAC insulation in North America & GCC is growing at a healthy rate and is expected to grow substantially during the review period owing to the bolstering construction sector in the respective regions. For instance, the U.S. construction revenue crossed the USD 1 trillion mark recently and is expected to reach USD 1.7 trillion by 2020. For the first time since 2007, the difference in GDP contribution from the construction sector with respect to the country’s economy is narrowing i.e., a considerable increase in the rate of construction. Thus, rebound in the different construction sectors viz., residential, commercial, infrastructure, and industrial & institutional supported by favorable economic conditions in the U.S. and the demand for energy efficient HVAC systems will be the market propellant in North America. Similarly, In GCC, the stable oil prices USD 55-60/barrel has reflected a 2.3% growth in GCC’s GDP in 2017, along with other macroeconomic drivers, such as the increasing population, increasing tourism, and upcoming mega-events, such as the 2020 expo and FIFA world cup in 2022 in Qatar to pulsate investment in construction activities. In the purview of government mandated regulations on replacing old HVAC systems and the ongoing and proposed construction activities across the GCC countries such as megacities, metro rail projects, hotels, and residential constructions among other projects to pulsate the demand for HVAC system in the GCC region. The subsequent demand in the old and new construction in the regions will witness demand for HVAC insulation sheets and auxiliaries adding substantial value to the HVAC insulation market in GCC.
Where is the business opportunity?
America, the majority of business opportunities lies in the U.S in line with the regained stability of housing and construction sector, which crashed during the economic crisis of 2007-08. However, with the favorable economic, declining unemployment rates and the demand for sustainability in the new buildings are some of the major and underlying market factors expected to boost the HVAC insulation business opportunities in the U.S. In addition, the evolution of green buildings in the North American continent will further boost the business for HVAC insulation. The U.S. witnessed exponential growth in green buildings in the past few years. The LEED (Leadership in Energy and Environmental Design) certifications rose from 296 certifications in 2006 to more than 65,000 in 2017. HVAC is an important factor in achieving LEED credits, which in turn is creating substantial demand for energy efficient HVAC insulations and auxiliaries in the country. The global green buildings market is expected to cross the ~ USD 235 billion mark by the end of 2019, led by the increasing adoption of green buildings in the developed markets such as the U.S. and Germany. Thus, considering the futuristic leap in green buildings in the U.S. will offer lucrative opportunities for HVAC insulation and auxiliary manufacturers in the region. Furthermore, Canada has the highest number of LEED buildings per capita in the world, the country is projected to witness further increase in green buildings over the coming years supported by the growth in retro-commissioning in existing buildings in the country’s provinces along with other factors such as investments in research & innovation in windows, insulation and other construction products for green buildings and federal support on the ongoing research will offer surplus opportunities for HVAC insulation market in the country.
GCC has been always a sweet spot for the HVAC industry, owing to the climatic conditions in the region and the huge investments in the construction sector of the region. Over the coming years, the GCC region is expected to witness tremendous investments in the construction sector in line with the rebounding crude oil prices and increasing tourism in the region along with various upcoming events around the corner. The ongoing and proposed construction projects across the GCC is valued at approximately USD 2,700 billion, with Saudi Arabia leading the construction investments followed by UAE with project completions projected between 2025-2030.
What should be the business strategy?
The installation of HVAC insulation and the various components used in the HVAC system is subjected to various regulations. The manufacturers have to come up with products that are aligned to the industry standards and requirements. The HVAC insulation manufacturers shall come up with products that are cost-effective, sustainable and adhering to the industry standards without jeopardizing the performance should be the strategy. Apart from product developments and product launch, the manufacturers should target the high demand regions by expansion or joint ventures to cater the demand. For instance, Hardcast (Carlisle) in 2014, has joined hands with Kazema Supply and Parts to launch its HVAC products in Qatar. This distribution agreement was in line with the company’s strategy to distribute its products in the high growth HVAC markets in the Middle East including Qatar.
So, what may restrain the North America & GCC HVAC insulation Market?
To cope up with the increasing scrutiny on energy efficiency in new and old constructions from the government with regards to the components and auxiliaries used in the HVAC systems, the manufacturers are under constant pressure of product alteration to address the new HVAC compilation mandates. Thus, the constant changes in government regulations for HVAC result in product alterations and certifications in order to cope up with the new compliance, which in turn increases the cost for HVAC insulation and auxiliary manufacturers, which is the major market factor that might constrain the market. Also, increasing penetration of green HVAC products is acting as a substitute replacing the traditional products.
Recent Trends in North America & GCC HVAC insulation
Some recent trends noted in the North America & GCC HVAC insulation market include the increasing awareness of pre-insulated ducts for optimizing the HVAC energy consumption in HVAC systems. Collaborations among HVAC companies have been noted in the GCC region to offer pre-insulated ducts in the recent past. For instance, Faisal Jassim group, a leading name in the HVAC in GCC has introduced the concept in the region in collaboration with Europe’s leading manufacturers of innovative building materials and solutions; Kingspan Insulation. Thus, the prevailing trend of pre-insulated HVAC ducts in the market will act as a catalyst for the HVAC insulation and auxiliary market growth in GCC.