BSRIA, a pioneer expert in Heating, Ventilation, and Air Conditioning (HVAC) markets, has published its latest findings on global air conditioning (AC) trends.
The report highlights growth influenced by climate extremes, evolving construction cycles, and rapid technological progress.
Worldwide AC sales are anticipated to progress positively, with a projected overall growth increase of 3.7% by the end of 2025 compared to the previous year. Despite this global uptrend, demand varies due to economic uncertainties and regulatory changes.
Global AC Market Outlook
The AC industry is experiencing substantial changes fueled by extreme climate conditions
According to Lisa Wiltshire, Business Manager for Market Intelligence at BSRIA, “The global outlook for the AC market remains largely positive, with further growth forecast as 2025 draws to a close. However, it has been a mixed year, with the market seeing contrasting demand in different parts of the world.”
The AC industry is experiencing substantial changes fueled by extreme climate conditions, infrastructure investments, and increased construction of data centers worldwide. Although there's a steady demand for chillers, regional growth inconsistency persists.
The market's future trajectory is expected to be influenced by three major factors: the continuous rise in cooling solutions for data centers, a transition to low-global warming potential (GWP) refrigerants and higher efficiency standards, and the evolving competitive landscape as Chinese manufacturers broaden their footprint.
Impact of Regional Growth
Regional variations reveal differing influences from climate-driven instability, energy efficiency policies, and the shifting competitive scene. The Middle East has surfaced as a significant growth area, driven by mega projects, urbanization, and unprecedented temperatures.
The United Arab Emirates (UAE) has seen robust growth in the chiller market with notable increases in sales of screw, scroll, and centrifugal chillers, spurred by real estate development and tourism infrastructure.
Japan’s market reached new heights after record-breaking heat waves prompted upgrades in its aging residential infrastructure. Meanwhile, South America and Africa also experienced increased AC demand due to extreme temperatures, with Brazil and multiple African nations seeing significant growth.
Conversely, India's sales slowed after a record 2024 due to overstocking and milder weather, though promising fundamentals remain, particularly with energy-efficient inverter technology advancing.
Rising Demand from Data Centers
Data centers are a pivotal factor reshaping the global chiller market, with sales projected to hit USD 11.6 billion
Data centers are a pivotal factor reshaping the global chiller market, with sales projected to hit USD 11.6 billion in 2025, marking a 4.3% rise from 2024.
This trend is observable globally, with notable projects underway in Japan, including two 150 MW facilities by SoftBank. In the UAE, Khazna leads with their 100 MW AI-optimized data center.
Meanwhile, in the US, Texas and North Virginia are prominent states spearheading data center development, reinforcing chiller sales along with semiconductor and electric vehicle infrastructure growth.
China's Strategic Expansion
China's domestic AC market presents a multifaceted scenario. Demand rose in early 2025, but the real estate downturn has led to projections of a 5% decline in the VRF market and a similar downturn in chillers.
Nonetheless, Chinese manufacturers are pursuing international growth through strategies emphasizing scale, competitive pricing, and local manufacturing, thereby intensifying competition globally. In Brazil, this has resulted in a substantial decrease in split AC prices, compelling South American and global players to reconsider their pricing strategies.
Future Growth Opportunities
Despite current volatility, influenced by regulatory adjustments, the core drivers of urbanization, digitalization, and sustainability indicate promising growth potential for the AC market in the forthcoming years.
BSRIA, a world-renowned authority on the Heating, Ventilation, and Air Conditioning (HVAC) markets, has released its latest analysis on global air conditioning (AC) trends, reporting growth driven by climate extremes, changing construction cycles, and rapid technological advancement.
At a global level, sales are forecast to continue an upward trend, and 2025 is expected to close showing an overall increase of 3.7% in growth compared to the previous year. However, while demand for cooling has grown worldwide, this growth is uneven, largely due to economic uncertainty and regulatory disruption.
Global outlook for the AC market
Lisa Wiltshire, Business Manager – Market Intelligence, at BSRIA, said, “The global outlook for the AC market remains largely positive, with further growth forecast as 2025 draws to a close. However, it has been a mixed year, with the market seeing contrasting demand in different parts of the world.”
“The AC market itself is undergoing vast transformation, driven by extreme climate changes, infrastructure investments, and the surge in data centers being built across the globe. Yet, while demand for chillers continues, regional growth is uneven.”
“Looking ahead, the market’s trajectory will be shaped by three key forces: the ongoing rise of cooling solutions for data centers, the shift towards low-global warming potential (GWP) refrigerants and higher efficiency standards, and the changing competitive landscape as Chinese manufacturers expand their presence.”
Regional growth powered by climate and development
Regional dynamics paint a diverse picture impacted by climate-driven volatility, energy efficiency policies, refrigerant transitions, and intensified global competition.
The Middle East emerged as a major growth center with expansion driven by mega projects, urbanization, and record temperatures. In the UAE, specifically, the chiller market expanded strongly with growth of 15% for screw chillers, 14% for scroll units, and 9% for centrifugal chillers, fuelled by real estate development, tourism infrastructure, and the development of district cooling networks.
In Asia, Japan saw sales volumes reach new highs following record-breaking heat waves, with Japan’s ageing residential infrastructure driving demand for HVAC system upgrades.
Climate-driven demand
Climate-driven demand was replicated in other regions, such as South America, where Brazil experienced the second-hottest summer on record this year, boosting demand across the country. Likewise, Africa experienced significant growth in the first half of 2025, with heat waves boosting sales across the continent as cooling becomes increasingly essential infrastructure.
Meanwhile in India, after a record 2024, overstocking and milder early weather slowed sales in 2025. However, the country’s fundamentals are unmatched with 90% of single-split purchases made by first-time buyers and 60% of all new single-split air conditioners sold using inverter technology, which is more efficient and helps users to save on electricity bills.
In Europe, Germany's AC market is expanding, with split system sales increasing by 20%, driven by residential adoption and government heat pump incentives. Spain is also outperforming with 14% chiller market growth, fuelled by tourism, healthcare investment, and a doubling data center pipeline.
Demand from Data Centers
Data centers have emerged as the foremost contributing factor reshaping the global chiller market, with total sales expected to reach USD 11.6 billion in 2025, representing a 4.3% increase from 2024.
The impact is global. Japan has approximately ten data center projects in development with a total capacity of up to 600 MW, including a 150 MW facility from SoftBank and another 150 MW project from SoftBank and OpenAI.
Additionally, in the UAE, Khazna's 100 MW AI-optimized data center is anchoring market expansion, while continued data center growth in the US, alongside semiconductor and electric vehicle manufacturing, continues to drive robust chiller sales. Texas and North Virginia are among the top US states for data center construction starts in 2025.
China's strategy
China’s domestic market presents a complex picture. While overall demand grew in the first half of 2025, the real estate slump has led to downward revisions, with the VRF market projected to decline by approximately 5% in 2025 and the chiller market pulled down by over 5%.
However, Chinese manufacturers are accelerating international expansion through a strategy leveraging scale, pricing, and local manufacturing. This is allowing Chinese brands to price aggressively, intensifying competition in nearly every global region.
This is evident in countries such as Brazil, where competitive Chinese pricing has pushed split prices down by up to 20%, forcing established AC manufacturers in South America, and around the world, to reconsider their pricing distribution strategies.
strong growth potential
While the report demonstrates that short-term volatility remains, particularly in markets adjusting to regulatory changes, the core drivers of urbanization, digitalization, and sustainability continue to suggest strong growth potential in the coming years.
