The market for room and packaged air-conditioning in the Middle East and India was valued at $1.4 billion in 2000 with sales of 2 million units. It is estimated to increase dramatically to $2.1 billion and 2.9 million units by 2004.

India is growing at a breathtaking 21 per cent per year growing from 31 per cent of the region's market in 2000 to 43 per cent by 2004.

Remarkably, the explosive growth to date has been in the commercial sector, with 65 per cent of sales confined to eight cities. With residential penetration currently only 12 per cent, and with the rising levels of disposable income coupled with relaxation of credit by banks, the growth potential is immense.

Saudi Arabia is the other huge market with sales of $511 million and 800,000 units in 2000, nearly 40 per cent of the region. The UAE accounts for 14 per cent with Egypt, Kuwait and Iran accounting for the remaining 12 per cent of the market.

Iran emerges as the other massive growth market with sales increasing by 23 per cent per annum by value from 2000 and nearly 30 per cent by volume.

It does, however, remain difficult to penetrate, with LG and Samsung among the few international players along with an OEM brand from Thailand called OGeneral.

Windows and minisplits

Window (and through-the-wall) units dominate the region with l.4 million units sold last year (out of the total of 2 million room and packaged units) with value growth expected to run at 10 per cent per annum until 2004.

The two drivers of the region are India and Saudi Arabia. For Saudi Arabia, some 900,000 units are produced annually and 38 per cent of production is exported. As a result of the intense heat in the region sales above 5 kW are significant.

However, minisplits are growing even faster at 14 per cent per annum. Egypt emerges as the second largest market by volume, just behind Saudi Arabia, with India catching up fast and the UAE also significant.

Around a third of the market is for residential applications, but office, industry and shops form the lion's share of the market. Sales are almost entirely single split with very few sales below 5 kW.

Other units

The market is practically zero in Egypt and India for rooftops. These units, however, are heavily used in Saudi Arabia, Kuwait and the UAE, where there is a major market for villas, in addition to a wide variety of commercial applications.

For ducted split, the profile is similar, although the region is dominated by the UAE. There is also a big market for 'ductable splits' in India. Although they are similar in design to ducted minisplits, it is regarded as a separate and distinct market, and is considered under ducted split by BSRIA.

Close control or precision air-conditioning - which provides the environmental conditions required by computer rooms, telecommunication rooms and other critical applications - is benefiting from the huge growth in India and brisk growth in the Middle East with sales across the entire region growing at 13 per cent annum to reach $31 million by 2004.

Supply structure

The Middle East supply structure remains intensely competitive and complex with a number of major producers, brands and importer agents.

In both Saudi Arabia and Egypt, the market is dominated by local producers such as Zamil Airconditioners (ZAC), Alessa, Power, HACE (Golden Star) plus several owned by international companies such as Miraco and Juffali (Carrier), Al Assasiyah (Sanyo), and Mitsubishi Heavy.

Such companies may, however, also import other leading brands or other brands under private label and may also engage in OEM production.

The Iranian position is similar but with very few joint ventures - Saravel, Sarmafarin and Saran are major local manufacturers.

In Kuwait and the UAE, the market is dominated in each case by some half a dozen major importers, several of whom carry a number of international brands such as Juma Al Majid and Al Futtaim (UAE) and Hamad Abdulla Al Eisa and Y A Alghanim (Kuwait).

The Indian market has several unique features: