Chillers Market to Expand Due to the Growing Demand from the Commercial Real Estate and Manufacturing Sectors While the Trend of Energy-efficiency Requirement Will Bring a Paradigm Shift in the Product Strategies of the Companies
After witnessing a decline during the 2007-2008 economic crisis that affected a gamut of industries, the chillers market is reaching a tipping point of profitability for a few years now. The latest trend of the application of energy-efficient and eco-friendly chillers and innovations by the companies are aiding to the chillers market growth. For instance, in 2018, GEA Group AG innovated and offered the latest product in Blu-Q chiller, which meets the energy efficiency and environmental protection norms. The product received the “Accelerate Europe Innovation of the Year” award with a particular appreciation for the use of natural refrigerant. The product has eminently positioned the organization in the chillers market and the upcoming years will witness other companies emulating the innovation and coming up with eco-friendly chillers in order to gain more share in the global chillers market size which was evaluated at $9.4 billion as of 2018. The demand influx for vapor compression chillers, air-cooled condenser, and absorption chiller from the end-use industries such as manufacturing and food & beverages (F&B) is giving a further boost to the chillers market. The manufacturing industry is set to grow at a profitable rate as it will be playing a major role in fulfilling the sustainable development goals (SDGs) by the United Nations, and the associated markets will be leveraging the demand growth. The increase in demand for chillers from the end-use industries will lead to an increment in the chillers market valuation at a CAGR of 5% during the forecast period 2019-2025.
The buoyant commercial real estate sector is also creating a demand influx in the chillers market, especially because of the growing requirement for commercial properties such as corporate offices, shopping centers, and others. Furthermore, the residential real estate industry, which will also be playing a crucial role in fulfilling future housing needs, as mentioned in SDGs, is creating lucrative prospects for the chillers market players worldwide.
Another important trend which is going to disrupt the chillers market is coupling chillers with technology to provide a better user experience to the customers. For instance, Carrier – a company that has gained an unparalleled prominence in the HVAC industry, has added an extra technological feature to their chillers services. They have created an application with a facility that allows consulting and facilities engineers to choose chillers in a faster and easier way. In just three steps, the app displays the key technical specifications and product features of chillers, thereby helping engineers and customers to select the chillers they need with real-time accuracy. The chillers market trend of leveraging technology in order to provide better customer experience will gain prevalence in the industry, and the upcoming years will observe more companies venturing into the technological aspect of service.
The chillers market growth can be further fathomed by the growing trade in the parent industry. According to the International Trade Centre (ITC), the trade value of refrigerators, freezers, and other freezing equipment was valued to be $46.95 billion in 2018. The value observed a year on year increase at 7% between 2017 and 2018, which is evincing the growing demand influx in the parent industry, and a substantial part of it is attributable to the increasing requirement for chillers in the end-use industries.
APAC Proving to be a Lucrative Chillers Marketplace –
The rapid urbanization and industrialization is leading to greater demand in the APAC chillers marketplace, and the region subjugated with 38% share in the global chillers market revenues. The following table provides an overview of the growing trade in the parent industry which translates to the growing APAC chillers market size –
Table 1 – Import Value Corresponding to the Parent Industry
Import data source – ITC
While the aforementioned markets in APAC witnessed an increment, the 2018 trade value in India was $538.59m – same as it was in 2017. The growing chillers market in APAC is majorly attributable to the following factors –
· The Growth of the Real Estate Industry in APAC Creating Opportunities in the Chillers Market –
Ø Growing China Real Estate Industry & Subsequent Chillers Market Growth –
According to the State Council of People’s Republic of China, China’s real estate investment increased by 7.2% in 2017, and the figure was 6.9% in 2016. This indicates that there was an increase in the real estate construction activities in the resident and commercial subsectors, which, in turn, led to an increased chillers market demand. The investment in real estate has been increasing in China, which is positively influencing the associated industries, and so, the chillers market players are highly benefited by it.
Ø The Propitious Indian Real Estate Sector Creating APAC Chillers Market Demand –
The initiatives for housing development by the government has led to an increase in investments for real estate projects. For instance, the government has allowed up to 100% FDI for townships and settlement projects, which is the reason there has been an increase in real estate investments. Furthermore, the period 2009-2018 observed $30 billion worth institutional investments in the Indian real estate industry, which is raising the chillers market size in the country.
Ø Japanese Real Estate Industry – A Growing Chillers Marketplace Offering Opportunities to Companies –
The real estate industry was on a perpetual decline in Japan until the post-2011 earthquake regime that has now created an opportune time for the industry players. There is a myriad of redevelopment projects in Hibiya, Toranomon, Shibuya, Tokyo, and other cities of the country which is creating a consistent source of revenues for the chillers market players.
· Indian Oil & Gas Industry to Create Substantial Demand Inflow in the Chillers Market –
According to the findings by the India Brand Equity Foundation (IBEF), the Indian oil & gas industry is projected to attract $25 billion worth investments by the end of 2022. This signifies the growth in the production of oil & gas in the country. The oil & gas industry involves a gamut of heat transfer operations, which require chillers, and henceforth, the chillers market companies will be leveraging an augmentation in demand during the forecast period.
Another factor that will be disrupting the Indian chillers market is the fact the Government of India, Energy Efficiency Services Limited (EESL), and the World Bank signed $300m agreement in order to scale up India’s Energy Efficiency Program in August 2018. The forecast period is expected to witness the prominence of eco-friendly chillers in the region.
The China aviation industry is going to cause an upsurge in demand for chillers. According to the Civil Aviation Administration of China (CAAC), the country is aiming to have 74 more civil transport airports by 2020. Airports are equipped with chillers for cooling purposes, and these airport construction projects will support the APAC chillers market companies.
Additionally, APAC is an emerging frozen food market which is creating an increase in demand for chillers. Considering the demand from the end-use industries, the upcoming years are expected to create ease of business with a favorable pricing environment for the chillers market players in APAC.
Chillers Market – Global Scenario and Growth Drivers:
· Global Chillers Market Key Application: Scroll Chiller by Type –
The chillers market is segmented on the basis of type that includes scroll chiller, screw chiller, centrifugal chiller, absorption chiller, and reciprocating chiller. Scroll chillers are poised to gain maximum traction from the end-use industry at a profitable CAGR of 7.46% through to 2025. This is because of the fact that chillers with scroll compressors are the most used ones in commercial practices wherein the capacity is less than 30 TR. The growth of the commercial sector is translating to an enhanced demand for scroll chillers.
· The Global Urbanization Will Prove to Be a Boon for the Chillers Market –
Currently, 55% of the global population live in urban areas, and the figure is poised to catapult at a staggering rate, and as per the projection by the UN, the proportion is going to reach 68% by the end of 2050. This growth will include a lot of projects in real estate – both resident and commercial, which will increase the chillers market size.
· The Growth of the Global Frozen Food Market to Enhance Chillers Market Scope –
According to the Food and Agriculture Organization (FAO) of the UN, every year, 1.3 billion tons of food is lost or wasted, which equals to 1/3 of all food produced for human consumption. This disquieting situation has led to an increased demand inflow in the frozen food market. The eventual enhancement in the requirement for frozen food is creating opportunities in the chillers market.
· The Growing Electricity Consumption Due to Air Conditioners to Raise Demand for Energy-Efficient Chillers –
The global stock of air conditioners is 1.6 billion currently, and as per the projections by the International Energy Agency (IEA), the figure will attain a value of 5.6 billion by 2050. Furthermore, the global energy demand generated from air conditioners will be triple from the current figure. In the era wherein energy-efficient products are given more preference, the growing energy consumption from the air conditioners is giving rise to an augmented demand for energy-efficient chiller systems that are used for air conditioning purpose. So, the chillers market companies are innovating and creating energy-efficient chillers that can reduce global energy consumption. For instance, in December 2018, Daikin Industries Ltd. came up with the latest energy-efficient cooling systems for its R-32 chiller series which is much sought after by the end-use industries. As mentioned before, the need for energy-efficiency will play a vital role in the chillers market, and the companies will be strategizing their product models according to the same.
Chillers Market – Competitive Landscape:
The players that are expanding geographically and innovating to stay with tides of the time in the chillers market are Johnson Controls Inc., Trane, Inc., Broad Air Conditioning Co., Ltd., Robur Group, Daikin Industries Ltd., Thermax, Ltd., Carrier Corporation, Yazaki Energy Systems, Inc., Hitachi Appliances, Inc., and Century Corporation.
Ø In January 2019, Johnson Controls Inc. expanded its capacity for the production of the award-winning YORK YZ Magnetic Bearing Centrifugal Chiller that will include 1,350 tons or 4747 kW of refrigeration. The expansion demonstrates an increase in the chillers market demand.
Ø In October 2017, Trane, Inc. introduced small tonnage CenTraVec chillers for offices and municipal buildings, and the product has high-efficiency refrigerant R-123. The new product offering by the company signifies an increase in demand for chillers in the commercial sector.
Ø In January 2019, Thermax opened a new manufacturing unit in Andhra Pradesh, India in order to increase the organization’s revenues from the sales of vapor absorption products such as chillers.
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