11 November 2025
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Domestic air conditioners in a residential block in Singapore. Photo by Annie Spratt for Unsplash
BSRIA has released its latest analysis on global air conditioning 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.
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 centres 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 centres, 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 centre with expansion driven by mega projects, urbanisation, 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 heatwaves, with Japan’s ageing residential infrastructure driving demand for HVAC system upgrades.
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 heatwaves 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 centre pipeline.
Data centres: the single most powerful growth driver
Data centres 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 centre projects in development with a total capacity of up to 600MW, including a 150MW facility from SoftBank and another 150MW project from SoftBank and OpenAI.
Additionally, in the UAE, Khazna's 100MW AI-optimised data centre is anchoring market expansion, while continued data centre 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 centre construction starts in 2025.
China's strategy reshapes global competition
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.
Looking ahead
While the report demonstrates that short-term volatility remains, particularly in markets adjusting to regulatory changes, the core drivers of urbanisation, digitalisation, and sustainability continue to suggest strong growth potential in the coming years.
For more information, the report can be accessed here.
