The Shift Toward Centralised Cooling Systems in the Middle East
- brg_news_room
- 2 days ago
- 6 min read
Cooling accounts for as much as 70–80% of peak building energy demand across the Gulf, a figure that underscores just how central HVAC decisions are to real estate development, urban planning, and energy policy in the region. Against this backdrop, the structural shift away from standalone split and window units toward centralised air-conditioning systems such as VRF, ducted systems, chillers, AHUs, and packaged units has accelerated markedly over the past decade.
Penetration: The Commercial–Residential Split in Middle East Cooling Systems
In the commercial sector — offices, hotels, malls, hospitals, and airports — centralised systems (chillers, air handling units (AHUs), and packaged rooftop units) have been the default specification for large buildings for well over a decade. That is not the shift; that is an established baseline. The more meaningful current story is at the district scale. Dubai is the clearest benchmark: Empower, the region’s largest district cooling provider, operates multiple plants and networked production facilities with a connected capacity exceeding approximately 1.6 million refrigeration tonnes (RT), serving a significant share of the emirate’s district-cooled demand. Dubai’s official target under its Integrated Energy Strategy is to raise district cooling penetration to 40% by 2030, a goal that Empower’s ongoing expansion programme is intended to support, with capacity expected to increase further over the medium term as new projects come online.
Recent developments include additional district cooling capacity being added in key growth zones such as Dubai Science Park and Jumeirah Village, where new plants and expansions are supporting rising demand from large-scale mixed-use communities. These developments form part of a broader expansion of district energy infrastructure across the city, reinforcing Dubai’s position as the most advanced district cooling market globally.
The residential picture is more fragmented. The Gulf's mass-market housing stock, particularly older low-rise and mid-rise buildings across Saudi Arabia, Kuwait, and Bahrain, still runs predominantly on split units. The structural reason is straightforward that retrofitting centralised plant rooms and ductwork into buildings that were not designed for them is expensive and often impractical. New large-scale residential developments, however, are a different matter. High-density apartment towers in Dubai, Abu Dhabi, and Doha now routinely specify VRF or ducted systems from the design stage, driven partly by green building certification requirements (Estidama in Abu Dhabi and Dubai Green Building Regulations) and partly by the preferences of developers targeting the premium segment, where concealed installations and individual zone control have become expected features.
Country-by-Country Market Dynamics
The UAE is the most advanced market by any measure. Dubai's district cooling infrastructure is genuinely world-class, and Abu Dhabi's Masdar City has served as a testbed for integrated district systems since the early 2010s. The UAE's mandatory green building codes have also pushed commercial specifiers toward higher-efficiency centralised solutions more consistently than anywhere else in the Gulf.
Saudi Arabia is the market with the most volume in play over the next several years, though the reality needs to be viewed with greater nuance. NEOM, frequently cited as a headline demand driver for advanced cooling, has faced revisions in scope and pacing. The Line project, originally envisioned at 170 km, has been scaled down significantly in its initial phase rollout, with early-stage development focusing on a much shorter segment rather than the full execution of the original concept. The project's long-term direction remains uncertain. This does not invalidate Saudi Arabia's broader HVAC demand story, which is rooted in real construction activity. Riyadh's commercial expansion, the Red Sea Project, and ROSHN's large-scale residential programme, but the NEOM narrative needs to be set aside as a near-term driver. The more grounded picture is one of incremental upgrades to commercial stock, a growing premium residential segment specifying VRF, and the slow but real influence of Saudi Arabia's energy efficiency standards (SASO regulations have progressively raised minimum SEER requirements, and new public buildings are increasingly required to use inverter-driven systems).
Qatar's construction boom, which accelerated sharply ahead of the 2022 FIFA World Cup, has left a legacy of large-scale commercial and institutional buildings — stadiums, hospitals, hotels, and university facilities, almost all of which run on chiller-based systems. Lusail City, developed on greenfield land north of Doha, was designed from the outset with district cooling infrastructure, making it one of the more complete examples of integrated cooling planning in the region. Qatar's pipeline is now more maintenance- and upgrade-orientated than new-build, but the technical standards set during that construction cycle continue to influence specifications.
Kuwait, Oman, and Bahrain show steady but more modest centralised cooling adoption, concentrated in government buildings, hotels, and upscale residential and mixed-use developments. The residential base in these markets remains more split-unit-dependent than in the UAE or Qatar, reflecting both the lower density of their urban fabric and the historically lower emphasis on formal energy codes, though this is changing as the GCC moves toward unified minimum efficiency standards.
The Refrigerant Shift Reshaping HVAC Specification
One of the more operationally significant near-term issues for HVAC specifiers and contractors across the region is the ongoing shift away from R-410A. The GCC has been slower than Europe or North America to formalise phase-down timelines, but the pressure is arriving through a combination of channels: the Kigali Amendment to the Montreal Protocol (which GCC states have ratified); green building certification requirements; and the straightforward commercial reality that global manufacturers, including LG, Daikin, Mitsubishi, and Carrier, are already transitioning their product lines to R-32 and R-454B.
R-32 (GWP 675) is becoming the default refrigerant for new VRF systems across the region. At BIG 5 Global 2025 in Dubai, low-GWP refrigerants — R-32 and R-290 were described by exhibitors and specifiers as the primary focus for new procurement, particularly for projects seeking green certifications or anticipating tighter future compliance requirements. The transition matters operationally because R-32 systems are mildly flammable (A2L classification), which has implications for shaft ventilation requirements, service training, and leak detection provisions details that are beginning to appear in updated local codes but are not yet consistently enforced across all GCC jurisdictions.
For chiller applications, the picture is more complex. Many large centrifugal and screw chillers are being respecified with low-GWP options, and manufacturers are developing high-ambient-temperature variants specifically for T3/T4 climate conditions. The Desert Certification standard — which verifies equipment performance at extreme temperatures is an important step toward standardising this, but its adoption is still uneven.
Localisation of the Supply Chain
A structural shift in how equipment reaches the region is underway, with potential long-term effects on both pricing and lead times. The most significant development is the Carrier–Alat partnership, announced in February 2024, which will establish a manufacturing and R&D facility in Saudi Arabia capable of producing VRF systems, air-cooled chillers, AHUs, and rooftop units for the MENA market. R&D at the facility will specifically target high-ambient-temperature performance and low-GWP refrigerant compatibility, two of the most technically demanding requirements for Gulf conditions. Johnson Controls has already demonstrated that local manufacturing at scale is viable: its King Abdullah Economic City facility now exports locally produced chillers to 26 countries, with nearly 100 Saudi-made units shipped to the United States in early 2025. LG is also exploring compressor manufacturing in Saudi Arabia through an MoU with the Ministry of Investment.
The significance of local manufacturing goes beyond cost. It reduces the lead-time risk that has historically been a real constraint on large HVAC procurement in the region, particularly for chiller and AHU packages on fast-moving construction schedules. It also creates a regional base for climate-specific product development, which matters because standard catalogue specifications from Europe or North America often require modifications for T3/T4 ambient conditions.
The Retrofit Challenge
New-build is the straightforward part of the centralised cooling story. Retrofit is where it gets harder, and the region has not adequately addressed this. A significant proportion of existing residential and commercial stock across the Gulf was built without the structural provisions – plant rooms, riser shafts, and ceiling voids for ductwork needed for centralised systems. This stock is not going to be redeveloped quickly, which means that the absolute split-unit base remains large even as new developments default to centralised solutions.
There is a middle path that is gaining traction in older commercial buildings: VRF retrofits, which can avoid the need for full ducted infrastructure while still delivering building-level control and efficiency gains compared to individual split units. This approach is being used in hotel refurbishments, office upgrades, and some older residential towers across Dubai and Riyadh, particularly as building owners face rising energy costs and pressure to comply with updated efficiency standards on lease renewals. It is not a perfect solution; VRF refrigerant piping runs can still be disruptive in occupied buildings, but it is increasingly positioned as a pragmatic midpoint.
Future Outlook
The long-term outlook for centralised air-conditioning in the Middle East remains strongly positive. As cities continue to expand and modernise, centralised HVAC systems are likely to become the default choice for medium- to large-scale developments. Residential demand will increasingly favour VRF and ducted systems, while commercial and institutional projects will continue to rely on chillers, AHUs, and packaged units.
Future adoption will be shaped by tighter building codes, growing awareness of lifecycle efficiency, and the integration of HVAC systems with smart-city platforms. Centralised air-conditioning will also play a critical role in achieving sustainability targets, particularly as renewable energy and intelligent controls become more closely linked to building operations.
In conclusion, the shift toward centralised air conditioners in the Middle East is not a temporary trend but a structural transformation of the HVAC landscape. Driven by climate, urban growth, policy direction, and evolving consumer expectations, centralised systems are redefining how cooling is delivered across the region’s residential and commercial environments.
Kajal Gupta
Source: BRG Research
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