UK HVAC industry can expect 4% growth over next three years according to a report by AMA Research.
Its 'Ventilation, Air Conditioning and Non-Domestic Heating Market - UK 2007-2010' report states that having experienced a positive trend between 2000 and 2006, the industry will benefit from continued growth of around 3-4% to 2010.
The overall ventilation, air conditioning and non-domestic heating market is estimated to be worth some £1.35 billion in 2006. The UK HVAC market achieved positive growth to 2001, followed by low-level growth of around 1-2% from 2001 to 2003,and approximately 2-3% from 2004 to 2006.
Increased public sector construction growth is seen as a key factor in this growth but the drive for energy efficient products and the increasingly prescriptive environmental, building and health and safety legislation are also having a positive effect on the market.
The report states that the UK economic climate was uncertain early this year, reflecting a combination of substantial public sector investment, balanced by a moderation in consumer confidence.
In the commercial construction sector, output continues to grow, whilst in the public sector substantial health and education capital investment programs are in progress, although in the industrial construction sector, levels are relatively static. There are no indications of any significant upturn in housing output and the recent interest rate rises have constrained consumer confidence a little.
Further influences that have an impact on the market include the application of heat-pump based heating and cooling solutions, heat recovery and energy efficiency. In addition, continuing growth of mobile temporary or long-term boiler and chiller hire represents a trend, which is likely to have an impact on the manufacturers' market in the long term.
The potential of 'natural cooling', using ground water, remains to be fully developed, with potential applications including London underground tube stations, etc.
The level of demand for HVAC products varies regionally throughout the UK, reflecting the various levels of construction activity, EU investment strategies, local industry specialisation and house building programs, also geographical, seasonal and climatic features. In particular the advent of the Olympics will further bias the construction investment to the South East.
The report said lengthy planning and contract approval processes can cause considerable delays in the scheduling of projects, which can impact adversely on turnover figures and cash flow projections.
The air-conditioning market is estimated to account for the largest share (43%) of the total value of the HVAC market with a 2006 market value of around £576 million, of which packaged air conditioning products contributed an estimated 62% in value terms.
Underlying trends supporting growth in the air conditioning market include greater expectations of 'comfort cooling' in the workplace and home, improved air quality, the increase in popularity of packaged air conditioning units, including hire and mobile air conditioning units. In addition, niche markets such as cleanrooms, air source heat pump heating and cooling solutions for the small retail sector, including refrigeration for food stores, are likely to add value to the market.
Continuing growth of the packaged air conditioning sector has been accelerated by a succession of hot summers with significant rises in demand from the residential and small commercial/light retail sectors.
Whilst future forecasts for the air conditioning market are dependent upon levels of Government investment in health, education and the infrastructure, substantial opportunities exist in the private sector, for example the casino construction program, whilst retail expansion mirrors the expansion in urban regeneration schemes.
A key barrier to the expansion of air conditioning in the UK is the extent to which future energy efficiency policies will tolerate the levels of electricity consumption likely to be incurred. The cost to the consumer of air conditioning also has to be considered, bearing in mind the relatively high levels of electricity prices and energy generally.