The HVAC Market in 2024: Sharp Declines Spare the Air Conditioning Segment

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The HVAC Market in 2024: Sharp Declines Spare the Air Conditioning Segment

Recent years have been marked by significant uncertainty and market volatility in the HVAC equipment sector. Following a period of dynamic growth in 2021–2022, particularly in the heating sector, when heat pump sales reached record levels, 2023 brought a significant correction to these upward trends. Forecasts for 2023 had anticipated a continuation of the trends from 2022, but reality turned out differently, and the market experienced a slump in sales. Furthermore, weakened demand, combined with the liquidation of excess inventory, led to price declines.

Against this unfavorable backdrop, the situation in the air conditioning equipment segment stands out clearly; it was the only part of the Polish HVAC market to record growth in value in 2023. Air conditioning is and will remain the most stable segment of the Polish HVAC market in the coming years—according to the latest PMR report: The HVAC Market in Poland 2024. Analysis and PMR Forecasts for 2024–2029.

Breakdown of HVAC Installations in Poland (by equipment value, expressed as a percentage), 2022–2023

Device Type	2022	2023
Heating Equipment	64%	51%
Ventilation Equipment	17%	19%
Air Conditioning Units	19%	30%

Source: PMR Report, “The HVAC Market in Poland 2024: Market Analysis and Growth Forecasts for 2024–2029.”

Declines in the Heating Equipment Market

In 2023, the situation in the HVAC market varied significantly across its various segments, which led to changes in the forecasts for 2024 and beyond.

In the record-breaking year of 2022, the heating equipment segment saw the strongest growth; however, that same segment is currently experiencing the sharpest declines. In 2023, we saw a collapse in demand for heat pumps. Sales of heat pumps fell by nearly 40% year-over-year. Demand for gas boilers declined to a slightly lesser extent. The slump in demand for heat pumps and full warehouses of these units caused a sharp drop in their prices. As a result, the value of the heating equipment market fell in 2023 by as much as 41% year-over-year to 5.4 billion PLN. Forecasts for 2024 are slightly more optimistic for the segment of the market related to gas boilers—demand for these units is slowly beginning to recover. In contrast, the downward trend remains evident for heat pumps.

The introduction in mid-2024 The introduction of the list of green equipment and materials (ZRIM) eligible for subsidies, along with unclear and complicated qualification procedures, is yet another factor introducing additional complications and, as a result, hindering a potential market rebound. Standardizing specifications and ensuring the appropriate quality of heat pumps are necessary, but the manner in which this mechanism and the qualification procedures have been implemented exacerbates the chaos and affects all heat pump manufacturers and distributors.

Szymon Jungiewicz

Head of Construction Market Analysis

As a result, PMR analysts expect sales of heating equipment to continue to decline in 2024. An improvement in this segment will most likely occur in 2025, when the recovery in construction activity enters a phase in which heating equipment will be installed, which will translate into increased demand in new construction projects.

Ventilation Equipment Segment Posts Significant Losses

The ventilation equipment segment also saw a decline in sales in 2023, though not as sharp as that in the heating equipment segment. This segment is closely tied to new investments, so the decline in investment activity in building construction led to a drop in sales of ventilation equipment, particularly heat recovery units intended for new single-family homes. Sales of heat recovery units fell by approximately 11% year-over-year in 2023, in value terms, to PLN 2.1 billion.

The forecasts for 2024 in the baseline scenario assume that the weaker activity in building construction will continue to have an adverse impact and that the downward trend will persist. An improvement is likely to occur in 2025 and subsequent years.

Stable conditions in the air conditioning equipment segment

Currently, the most stable part of the HVAC equipment market is the air conditioning segment. In 2023, demand remained stable, particularly for the smallest units—split-type air conditioners. In contrast, sales in the segment of larger-scale units—VRF air conditioning systems—declined by a few percent. At the same time, interest in units based on chilled water systems was on the rise.

The air conditioning equipment segment was the only part of the Polish HVAC market to record a 14% year-over-year increase in value, reaching 3.2 billion PLN. According to the PMR Forecasts presented in the PMR report “The HVAC Market in Poland 2024: Analysis and Growth Forecasts for 2024–2029,” this upward trend will continue in 2024 and beyond.

The downturn in the building construction sector is leading to a decline in demand in the HVAC market

The HVAC market is clearly closely linked to the building construction market. Current trends in the building construction market influence the demand for HVAC equipment, which is essential for projects involving residential and nonresidential buildings.

The strong growth in 2021–2022 was the result of record-high construction activity in the building construction sector, particularly in residential construction. Similarly, the declines in new construction projects—which have been occurring in the building construction sector since 2022—are translating into a decline in demand for HVAC equipment. Additionally, the market is affected by turbulence and sharp price increases in the energy markets, as well as confusion and a lack of clear direction regarding long-term strategies and policies for supporting or banning specific segments of equipment that use various energy sources.

As a result, 2023 saw a sharp decline in HVAC equipment sales, and the situation in 2024 will also be characterized by further declines in demand across most market segments. In the second half of 2023, a slight rebound began in the residential real estate development market, driven primarily by developers’ response to a surge in demand for apartments, fueled by the government’s “Safe 2% Loan” program. This trend toward resuming previously suspended real estate development projects continued into the first half of 2024.

In the first half of 2024, developers reported a 68% increase in new construction starts. Announcements regarding the new government program “Mieszkanie na Start,” scheduled to be launched in 2025, are also expected to sustain this positive trend, and in such a scenario, the HVAC equipment market will continue to grow.

Breakdown of Installed HVAC Equipment in Poland by Building Type, 2020–2023 (% by volume)

Building Type	2020	2021	2022	2023
Residential buildings	79%	77%	71%	68%
Nonresidential buildings	21%	23%	29%	32%

Source: PMR Report, “The HVAC Market in Poland 2024: Market Analysis and Growth Forecasts for 2024–2029.”

The Recovery of the HVAC Equipment Market

Despite the current slump in demand, the heating sector remains the largest segment of the Polish HVAC market—heating equipment accounted for 51% of the market’s value in 2023. The ventilation and air conditioning sectors are significantly smaller.

In the coming years, the situation in the HVAC market will most likely calm down significantly and stabilize; we will no longer see such rapid changes as those that have taken place in the market over the past three years. Demand for HVAC equipment will gradually recover—signs of this trend are already visible. The recovery of building construction projects, a visible upturn in the residential real estate development segment, and the expected improvement in non-residential commercial construction are factors that allow us to look optimistically toward the future of the HVAC equipment market.

An important trend that is becoming more pronounced each year is the growing share of replacements and retrofits in existing buildings. The trend toward a growing share of secondary installations—replacements and retrofits—is a natural development characteristic of highly developed HVAC markets. On the one hand, the number of properties requiring HVAC installations is growing year by year; on the other hand, these systems have a limited lifespan, so the demand for retrofit installations naturally increases year by year. In Poland, too, the scale and significance of this phenomenon are growing year by year, and the share of installations in existing buildings is increasing.

Szymon Jungiewicz

Head of Construction Market Analysis

However, given the scale of the declines and trends in individual segments of the HVAC equipment market—in particular, the slump in sales of heating equipment and the weakening demand in the ventilation equipment segment (due to lower volumes of new construction projects)— an improvement in the value of the overall market will not yet occur in 2024.

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