The demand for global cooling has increased 245 per cent since 2010 with the top 10 suppliers accounting for over 85 per cent of global sales in the residential market.
The market is divided into two distinct tracks: a high-value commercial sector driven by specialist applications and a high-volume residential sector where intense competition is suppressing prices.
According to the latest Worldwide Air Conditioning & Heat Pump Report compiled by the Building Services Research and Information Association (BSRIA), key forces shaping the industry include enhanced technology, tighter regulation and the rapid proliferation of data centre cooling systems.
There is a clear divergence in pricing. In the commercial sector, average selling prices for products like chillers and air handling units rose by 3.6 and 4.5 per cent respectively in 2025. This contrasts with the residential segment, where the average price for ductless split systems has declined.
Major growth in the data centre industry, is due to AI’s expansion creating demand for more advanced liquid cooling solutions.
This is accelerating the sales of chillers, with some systems, namely oil-free centrifugal chillers, driving more than half of the market in countries like Indonesia, Mexico, Turkey, the UAE or the USA.
From an HVAC and cooling supplier perspective, growth is being driven not only by the increase in data centre numbers, but the increase in higher heat density per facility. AI workloads are pushing racks beyond what traditional air systems can handle, accelerating the adoption of liquid cooling technologies.
Low-carbon cooling
Building owners and investors are increasingly focused on lifetime energy performance and the carbon impact of their cooling systems, rather than just the initial capital cost.
That is leading to an evolution in how AC systems look, how they’re procured, financed and operated. This has resulted in a premium for low-carbon, high-efficiency cooling solutions.
The research confirms a rapid shift towards inverter-based systems, particularly in emerging economies. India's market for inverter split systems is projected to reach 100 per cent by 2029, with Brazil and Saudi Arabia also showing strong growth.
This is happening alongside a legislative push to phase down low-energy-efficiency AC systems and HFCs, making low-GWP and natural refrigerants mainstream choices for new cooling systems and retrofits.
BSRIA research manager for AC, refrigeration & ventilation, Aline Breslauer, said 2025 was a year of uncertainty with rising competition and increased M&A activity driving consolidation.
“HVAC’s next phase will not be won by technology alone. It will be won by organisations that are built to operate in this new environment. Advantage will come from adaptability, not optimisation,” she said.
Yuki Nakajima, who is part of the inverter development team at Daikin Industries, said inverter air conditioners have a nearly 100% penetration rate in Japan, but their global penetration rate remains extremely low.
“There are many reasons for this, including cost, which is why we are working to lower the cost of inverters at Daikin Industries,” he said.
Inverter air conditioners are more expensive but lower energy costs which is why there is little interest for energy savings in regions where electrical energy is relatively inexpensive.
“In the future, as energy regulations change and power consumption at intermediate and low loads is pursued, inverter air conditioners will easily increase along with the mindset for energy savings," he added.