Middle East LED Lighting Market to Flourish Due to Increased Investments and Focus on Energy Efficiency

Light-emitting diode (LED) lighting has been heralded as the next big trend with the potential to transform the dynamics of the global lighting market. Although LED technology has now been available for over 50 years, the recent development of white LEDs and their use in automotive, commercial and residential industries have brought it into the mainstream lighting market. The global lighting market is expected to grow at a CAGR of 13% until 2018. The growth will be fuelled mainly by the use of LED lighting in large government as well as private projects,the energy efficiency of LED lighting and the increased awareness among consumers ofthe benefits of using LED lights. The measures taken by governments all over the world to stop or phase out the use of incandescent bulbs are further expected to provide crucial opportunities to stakeholders in this industry.

LED Lighting Market in the Middle East: Major Infrastructure Projects and Increased Consumer Demand to Propel Growth

Middle East has seen rigorous infrastructural investment in the last couple of years. The upcoming FIFA World Cup in 2022 has also given a boost to infrastructural development in the region. This growth in investments is expected to increase the demand for LED lighting in the Middle East. Hence, the LED lighting market in this region is expected to witness a high double-digit CAGR and become worth US$350 Mn by 2017.

LED lighting is being used increasingly in both interior and exterior applications in the automotive industry. Interior applications of LEDs include infotainment backlighting, dome and dash lighting. Exterior applications include tail lights, brake lights, parking lights, fog lamps and daytime running lights. The automotive market in the Middle East is expected to grow at a fast pace thereby increasing the demand for LEDs in this region.

All the major economies of the Middle East are now recovering as oil production has slowly picked up in the last two years. The recovery in economy has also seen the revival of infrastructure investments in the region. LEDs have become the preferred choice for lighting in large-scale projects. Therefore, it is expected that infrastructural growth will give a fillip to the prospects of LED market. 

Many countries in the Middle East have banned the use of incandescent bulbs or have taken steps to systematically withdraw them from the market.The United Arab Emirates (UAE), one of the richest countries in the Middle East and a member of GCC, prohibited the sale of incandescent bulbs last year, while Israel started phasing out incandescent bulbs from 2012. The low cost of incandescent bulbs has been a challenge to LED lights since their inception, and it is expected that banning or phasing them out will be favourable to the prospects of the LED market in the Middle East. 

Home to the world’s largestoil reserves, the Middle East has some of the highest carbon footprints per capita globally. The region’s oil and gas industry and the reliance on air-conditioning are the prime reasons for large carbon emissions in the region. Qatar, the nation that will host the FIFA World Cup in 2022, has the dubious distinction of having the highest carbon emissions per capita.

The governments in the Middle East have puteffort into raising awareness about the need to reduce carbon emissions. The increased emphasis on energy efficiency will provide a boost to the prospects of the LED market as consumers will be more likely to go for the energy-efficient LED lights.

Growing awareness about the benefits of LED lighting over traditional lighting will also increase its demand in the next 5 years. LED lights are highly energy-efficient and use only onethird of the energy used by an incandescent bulb. LED lights last up to 10 times more than compact fluorescent bulbs and about 25 times more than the traditional incandescent bulbs. Businesses looking for durable lighting solutions will benefit highly frominstalling LED lights, and this will act as a key driver for the LED lighting market in the Middle East. These properties of LED lighting, including energy efficiency, durability, and lower emissions have played an important role in the growth of the LED market in the US and EU. It is expected that these factors will appeal to businesses and consumers in the Middle East as well.

High Initial Cost: A Major Challenge to the LED Lighting Market in the Middle East

The initial cost of ownership of LED lights is quite high as compared to traditional incandescent lights and CFLs. Although LED lights provide great value for money and help save energy bills over a period of time, cost remains an entry barrier for many consumers in the Middle East. In the recent years, innovations in manufacturing technology have helped reduce the cost of LED lights, and it is expected that they will become more affordable in the next 5 years. Although the durability of LED lights is a major advantage, it can also pose a challenge to the growth of this market in the Middle East. LED lights have an average life of 10 years, which means the demand for new LED products is quite low from existing users. The LED sellers will have to look for new, first-time users to accelerate growth in this segment.

Leading global lighting brands, including GE, Philips, Osram, Tridonic, Ligman, Leotek, Schreder, and Amko Solara have their presence in the Middle East, and it is expected that they will benefit from the increased demand for LED lighting in this region. The competition is expected to be fierce,and innovation and pricing will play a crucial part in making a brand appealing to the consumers.