Doing Business in Saudi Arabia - International Franchise Association

Air-Conditioning & Refrigeration Equipment – ACR
Overview Return to top
The air-conditioning market in Saudi Arabia is considered one of the largest markets in the
world. The geographical fact remains that it is a very hot country especially during the summer
season. The overall value of air conditioners sold in the Kingdom is estimated at around $1
billion.
Four factors are currently shaping market size and growth:
• the growing population, including expatriates,
• high per capita income,
• the harsh climatic conditions in Saudi Arabia (hot climate year-round),
• the construction boom in the Kingdom.
Saudi Arabia’s population is growing at more than 3% a year and enjoys steadily rising
disposable income. Together, these two factors have spurred an unsurpassed construction
boom in the kingdom. Over the next few years, more than half a million housing units are going
to be constructed in the Saudi capital Riyadh alone, not to mention innumerable shopping malls,
business and leisure centers, hotels, supermarkets, schools and restaurants. Saudi Arabia’s
hot, arid climate is of course helping to propel the trend.
Saudi Arabia Future Demand by Units
(Source: The National Commercial Bank)
Year 2010 2015 2020
Fresh Household Demand 558,000 630,000 711,000
Fresh Business Demand 213,000 235,000 260,000
Replacement Demand 2,540,000 2,870,000 3,240,000
Total Demand 3,311,000 3,735,000 4,211,000
Best Products/Services Return to top
Saudi Arabia boasts the biggest air-conditioning market in the world, growing at 10% annually,
and the fast-paced construction sector thrives at an impressive 7%. This creates an array of
lucrative investment opportunities for companies from across the world. The Saudi Arabian
market remains receptive to high quality U.S. products and services.
The growth in Saudi Arabia’s air-conditioning and refrigeration sector has created a massive
subsidiary market for components and spare parts. As time passes, these units naturally need
more and more maintenance and repair. This in turn fuels the components and spare parts
market.
The Saudi market for air-conditioning spare parts and components has grown 7-8 per cent
annually over the last several years. The underlying factors supporting this growth are surge in
local manufacturing (28 local factories) which has created additional demand for original