INDUSTRY REPORT
CAGR of 7.6 % from 2025 to 2033 in terms of revenue,” explained the analyst.
Energy efficiency regulations and government incentives for smart and sustainable HVAC systems are propelling demand. Technological advances such as IoT-enabled monitoring, AI-driven optimisation and integration with renewable energy systems are further encouraging system upgrades and new installations.
“ In addition, government initiatives( such as rebates, incentive plans and clean heating & cooling equipment across North America & Europe) are expected to positively impact the demand for HVAC systems. Moreover, climate change and the growing popularity of improved indoor air quality are accelerating investments in air filtration and ventilation technologies,” continued the analyst.
It also highlighted that the market’ s structure reflects significant competition across product segments such as chillers, rooftop units, airhandling units and VRF( variable refrigerant flow) systems, with players differentiating through energy efficiency, automation and smart controls.
“ Market dynamics are heavily influenced by increasing demand for sustainable, low-emission HVAC solutions, driven by the rising urgency around climate change mitigation and net-zero commitments. Technological innovation is centred around inverter-driven compressors, heat pumps, demand-controlled ventilation and AI-integrated building automation systems. Compliance with energy efficiency standards is increasingly nonnegotiable, particularly in developed regions. Manufacturers are under growing pressure to deliver systems that not only meet performance requirements but also align with carbon reduction goals and refrigerant phase-down policies under the Kigali Amendment,” added the analyst.
Opportunities and challenges
“ The rising shift in lifestyles and higher demand for luxury in lifestyle( due to rising disposable incomes and rising temperatures in urban areas) are contributing to the higher demand [ for HVAC systems ] in the market. Increasing investments in research and development programmes for development and innovation in consumer goods technologies are further propelling the growth of the HVAC systems market,” added analyst, Precedence Research.
HVAC in focus
Heating: This refers to systems and equipment used to generate warmth inside buildings. Common heating systems include furnaces, boilers and heat pumps. They help to maintain a comfortable temperature during cold weather.
Ventilation: Ventilation is about ensuring the flow of fresh air into indoor spaces and removing stale air. This is crucial for maintaining indoor air quality, controlling humidity and preventing the buildup of pollutants. It can be achieved naturally through windows and vents or mechanically by using fans and ventilation systems.
Air conditioning: This component involves cooling and dehumidifying the air to make indoor environments comfortable during hot weather. Air conditioners and heat pumps are common devices used for this purpose. They work by removing heat from the indoor air and releasing it outside.
The supply base for critical components( such as high-efficiency compressors, electronic expansion valves and advanced filters) is relatively concentrated. This, combined with volatile input prices and semiconductor shortages, may constrain profit margins and affect lead times. The fluctuating prices of HVAC system raw materials, as well as tariff-induced supply chain disruptions, can also impact the cost and availability of HVAC equipment.
“ However, strong demand across healthcare, residential retrofits and data centres presents robust growth opportunities. To maintain competitive advantage, leading players are increasingly investing in modular, scalable and smart HVAC solutions, while also leveraging IoT and remote diagnostics to offer predictive maintenance and lifecycle optimisation,” outlined analyst, Grand View Research.
“ High upfront installation and long-term maintenance costs remain major barriers to the adoption of advanced HVAC systems, especially those incorporating smart sensors, inverter technology and low-GWP refrigerants. These costs are compounded by a global shortage of skilled HVAC technicians, which can lead to delays in project execution and improper system installation. In many developing or price-sensitive regions, affordability challenges make it difficult for consumers and institutions to transition from traditional HVAC units to energy-efficient, environmentally compliant alternatives,” it added.
However, it highlighted the global shift towards decarbonisation, driven by climate commitments and stricter emissions regulations, which is opening up vast opportunities for innovation in HVAC technology.
“ Demand is rising for systems using low-GWP refrigerants, integrated energy recovery ventilators and intelligent building management platforms that reduce carbon footprint while optimising indoor comfort. With both public and private sectors investing in sustainable construction and net-zero targets, manufacturers and service providers have a growing incentive to scale up R & D and deployment of green HVAC solutions across residential, commercial and institutional applications,” it advised.
ISMR November 2025 | ismr. net | 27