Indonesia HVAC Systems Market: System Type, Technology, Energy Source, Installation Type, Capacity, End Use Application, Distribution Channel, Market Size, Industry Dynamics, Opportunity Analysis and Forecast for 2025-2035

The Indonesian HVAC market is witnessing remarkable growth, fueled by several key factors including rapid urbanization, a surge in construction activities, and a growing awareness of energy efficiency among consumers and developers. Valued at US$ 5.82 billion in 2024, the market is projected to expand significantly, reaching an estimated valuation of US$ 17.56 billion by 2035. This represents a robust compound annual growth rate (CAGR) of 10.69% over the forecast period from 2025 to 2035. The United Nations forecasts that Indonesia's urban population will surpass 190 million by 2030, a trend that is already manifesting this year through increased development activities.

While major metropolitan areas continue to be focal points of growth, smaller towns like Depok and Tangerang are also experiencing a rise in middle-class housing developments. These new residential projects frequently include split-type air conditioners as standard features, signaling a growing expectation for climate-controlled living environments even outside the largest cities. According to the Indonesian Ministry of Public Works and Housing, over 500,000 new housing units were constructed in 2023 alone, with a similar pace maintained into 2024, particularly concentrated in the Java region. This construction boom is closely tied to broader urban expansion and economic development efforts.

Noteworthy Market Developments

Several leading companies dominate the Indonesian HVAC market, including global giants such as Daikin Industries Ltd., Samsung Electronics Co. Ltd., Panasonic Holdings Corporation, LG Electronics, and Mitsubishi Electric Corporation, among others. These companies have established commanding market shares, supported by their strong brand recognition and extensive regional operations. Their success in Indonesia is rooted in a combination of continuous innovation, offering a diverse range of HVAC solutions tailored to different customer needs, and maintaining robust distribution networks that ensure widespread product availability across urban and rural areas.

A notable development in the local market is Daikin's recent launch of its first full-scale residential air conditioner manufacturing facility in Indonesia. Situated in Cikarang, West Java, this new factory represents a significant milestone for the company's commitment to expanding local production and distribution capabilities. By producing units domestically, Daikin aims to improve supply chain efficiency, reduce lead times, and offer competitively priced products tailored to local market conditions. The factory is expected to start delivering locally manufactured air conditioners by July 2025, signaling a strategic move to strengthen Daikin's presence in Indonesia and enhance its responsiveness to market demands.

Core Growth Drivers

The Indonesia HVAC systems market is undergoing unprecedented growth, fueled primarily by the rapid increase in urban populations across the country's major metropolitan areas. Cities like Jakarta, Surabaya, and Bandung are at the forefront of this transformation, experiencing significant expansion through large-scale urban development projects. These developments include sprawling commercial complexes, high-rise residential towers, and mixed-use buildings that combine living, working, and recreational spaces within integrated environments. Such projects demand advanced and sophisticated climate control solutions capable of ensuring comfortable indoor environments despite the challenges posed by tropical heat and humidity.

Emerging Opportunity Trends

Solar-powered HVAC technology is transforming the Indonesia HVAC systems market as manufacturers innovate by introducing hybrid systems that integrate photovoltaic (PV) panels with conventional power sources. These hybrid systems harness solar energy to supplement traditional electricity, offering a more sustainable and cost-effective solution for cooling needs. Leading brands have developed solar HVAC units specifically optimized for tropical climates, capable of generating between 3,500 and 5,000 watts from rooftop solar installations. This output is sufficient to power residential cooling systems during peak daylight hours, significantly reducing reliance on the electrical grid and lowering energy costs for homeowners.

Barriers to Optimization

The Indonesia HVAC systems market faces significant accessibility challenges due to the premium pricing structures associated with energy-efficient equipment. While energy-efficient HVAC solutions, such as those incorporating inverter technology, offer substantial long-term benefits through reduced energy consumption and lower operational costs, their upfront costs remain a major barrier for many consumers. This issue is particularly pronounced among middle and lower-income households, which constitute a large segment of the market and are actively seeking affordable climate control solutions.

Inverter air conditioners, for instance, typically range in price from US$ 450 to US$ 800 for residential units. This pricing represents a 40 to 60 percent premium compared to conventional, non-inverter models that are priced around US$ 300. The higher initial investment required for energy-efficient systems often discourages widespread adoption, as budget-conscious consumers tend to opt for more affordable but less efficient alternatives that may lead to higher energy costs over time.

Detailed Market Segmentation

By Energy Source, electric-powered HVAC systems hold a dominant position, accounting for more than 74% of the total market share. This overwhelming preference is primarily due to Indonesia's heavy reliance on electricity as the main energy source for cooling solutions. The country's ongoing efforts to expand and modernize its power grid infrastructure have made electricity increasingly accessible across urban and semi-urban areas, enabling more widespread adoption of electric HVAC systems. This infrastructure development is crucial in supporting the growing demand for efficient cooling technologies that can meet the needs of diverse residential, commercial, and industrial users.

By Capacity, units with a capacity ranging from 2 to 5 tons have emerged as the most popular choice among end users, commanding a significant market share of more than 39.92%. This preference reflects the practical needs of Indonesia's urban infrastructure, where residential apartments, small office buildings, and retail spaces are prevalent. These settings typically require HVAC systems that can deliver effective cooling without excessive energy consumption, and the 2-5 ton capacity range strikes an ideal balance between these demands.

By End User Application, the residential sector stands out as the largest consumer segment, accounting for over 50.26% of all HVAC system installations. This significant share highlights the critical role that residential demand plays in shaping the overall market landscape. The dominance of this sector is largely influenced by Indonesia's tropical climate, characterized by consistently high temperatures and humidity levels throughout the year. These climatic conditions create a strong and continuous need for effective air conditioning and ventilation solutions to ensure comfortable living environments.

By Installation Type, new installations dominate the Indonesia HVAC systems market, accounting for over 57.50% of the total share. This trend reflects Indonesia's rapid urban development and the surge in construction activities across the country. Ambitious infrastructure projects, particularly the creation of new business districts in major cities like Jakarta and Surabaya, are major contributors to this demand. These large-scale developments necessitate the installation of advanced HVAC systems not only to satisfy the comfort needs of building occupants but also to comply with modern energy efficiency standards.

Segment Breakdown

By System

• Heating Systems
  • Furnaces
  • Boilers
  • Heat Pumps
  • Others
• Ventilation Systems
  • Air Handling Units (AHUs)
  • Exhaust Fans
  • Air Filters & Purifier
  • Humidifiers & Dehumidifiers
  • Others
• Air Conditioning Systems
  • Residential AC
    • Split Systems
    • Wall-mounted
    • Floor-standing
    • Ceiling Cassette
    • Ceiling Concealed AC
    • Multi-split Systems
    • Window AC
  • Commercial AC
    • Packaged Air Conditioners
    • VRV/VRF Systems
    • Unitary Systems
  • Applied Systems (Large-scale)
    • Chillers
    • Air-cooled
    • Water-cooled
    • Air Handling Units (AHU)
    • Fan Coil Units (FCU)
• Refrigeration & Cold Storage Systems/Equipment
  • Walk-In Coolers and Freezers
  • Cold Rooms & Warehousing Units
  • Display Refrigerators
  • Blast Chillers & Freezers
  • Transport Refrigeration Units
  • Ultra-Low Temperature (ULT) Freezers
  • Others

By Technology

• Conventional HVAC Systems
• Smart HVAC Systems

By Energy Source

• Electric-Powered HVAC Systems
• Gas-Powered HVAC Systems
• Hybrid HVAC Systems (Electric + Gas)
• Renewable Energy HVAC Systems

By Installation

• New Installations
  • Residential
  • Commercial
• Retrofits & Replacements
  • Residential
  • Commercial

By Capacity

• <2 Tons
• 2-5 Tons
• 5-20 Tons
• 20-50 Tons
  • 50 Tons

By End Use Application

• Residential
  • Building Type
    • Single-Family Homes
    • Multi-Family Apartments
    • Luxury Homes & Villas
    • Condominiums
  • Income Level
    • Low Income
    • Mid Income
    • High Income
• Commercial
  • Office Buildings
  • Retail
    • Convenience Stores & Small Shops
    • Supermarkets & Hypermarkets
    • Department Stores
    • Others
  • Shopping Malls
  • Hospitality Industry
    • Hotels
    • Others
  • Healthcare Facilities
  • Educational Institutions
  • Transportation
    • Station
    • Airports
• Commercial Multi (VRF)
• Industrial
  • Pharmaceutical
  • Oil & Gas
  • Construction
  • Food Processing
  • Data Centres
  • Warehouses
  • Others

By Distribution Channel

• Online
• Offline
  • Direct Sales
  • Distributors
    • Retail/Electronics Stores
    • Brand Stores
    • Multi Brand Stores

Leading Market Participants

• Mitsubishi Electric Corporation
• Daikin Industries, Ltd.
• Berca Carrier Indonesia
• Hitachi
• Samsung
• Carrier Global Corporation
• Johnson Controls
• LG Electronics
• Panasonic Corporation
• PT Trane Indonesia
• Other Prominent Players