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District cooling sees slump: end users have cooled off from district cooling following being hit by big bills

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The UAE has long been regarded as the hub of the region’s construction industry, with estimates putting the sector’s worth as high as $23bn, or about 6% of the country’s Gross Domestic Product.

According to predictions by Business Monitor International, the construction industry will contribute around 10% of GDP to the UAE’s economy by the end of 2011.

While there has obviously been a slowdown in new construction, approximately $923bn worth of projects are still planned or underway (2009 figures). Also fuelling this growth has been a shift in focus toward Abu Dhabi, where the UAE capital is carrying on with plans to spend heavily to develop its infrastructure and reduce its housing shortage deficit.

This strong performance has lead to the continued growth of the air conditioning market in the UAE, with sales being supported by order backlogs. Despite the decline in new construction, which has been ongoing since 2009, the UAE continues to be the biggest market for air conditioning, with major projects such as Masdar City, Khalifa City, Opus Towers and Dubai Marina 101 being amongst the main consumers of cooling products.

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Research conducted by BSRIA’s Gambi Chiang has found that the mainstream air conditioning products being sold in the UAE are high wall mounted single split, ducted single split, window and rooftop single packaged air conditioners.

Conversely, multi-split air conditioners are not very popular in the country.

“The majority of packaged air conditioners are imported from China, Bahrain, Saudi Arabia, Thailand and South Korea. There are several local manufacturers producing products for the local and export market,” Chiang says in a report compiled by the UK consultant.

“Local manufacturers export air conditioning products to other Middle East and African countries,” she adds.

The single duct split A/C system was introduced into the UAE market a mere 10 years ago, Chiang says, making it a still on-going trend in new development.

However, in 2010, the market saw a big drop in terms of sales due to projects being put on hold in Abu Dhabi, which is a very important market for ducted split air conditioning.

According to BSRIA, an estimated 68,000 new residential units were put on hold due to high construction costs and falling rent.

This freeze in construction thereby affected manufacturers who depended heavily on these new units for increased sales, Chiang says.

Meanwhile, other areas of the air conditioning industry were also affected. Over the last two or three years, the rooftops units market saw a sharp drop off in sales figures, with BSRIA estimating that the market value of rooftop chillers will decline from 2011 figures.

The research company forecasts that the market value for the product will be $117.9m for this year.

While that value is a massive jump upwards from 2010’s $56.1m, BSRIA says that the numbers are being artificially inflated by a major project, Al Falah City, which is being built near Abu Dhabi airport.

Developed by Aldar, the community occupies a 12.5 million m² area and contains 5000 villas being constructed for UAE nationals. It is part of the Abu Dhabi government’s master plan for Plan Abu Dhabi 2030.

As a result of this project, the market size of rooftops is expected to spike in 2011, with over 15,000 rooftop air conditioning units ordered from York. The first delivery was completed with 1000 to 2000 units being installed.