Middle East Data Center Market Landscape 2024-2029

Middle East Data Center Market Landscape 2024-2029

The Middle East data center market is expected to grow at a CAGR of 9.52% from 2023 to 2029.

KEY TRENDS

Increase in Usage of Inexhaustible Green Energy Sources

The UAE, Saudi Arabia, Qatar, Turkey, Bahrain, Jordan, and Kuwait have been working to incorporate renewable energy in their data center facilities for the past few years.

In November 2023, Equinix opened its third facility in Dubai, the DX3, the largest so far in the region. It would be powered 100% by renewable energy.

The NEOM Green Hydrogen Project is a groundbreaking initiative that aims to produce green hydrogen on a large scale in the NEOM region of Saudi Arabia. NEOM is a visionary city development project in the country's northwestern part, aspiring to become a leading global hub for innovation and sustainability.

Oman’s Vision 2040 and the National Energy Strategy aim to generate approximately 30% of electricity from renewable energy sources by 2030. These renewable energy projects include two solar IPPs in Manah, 11 solar-diesel hybrid facilities, a wind farm in Dhofar, and Sahim, an initiative to install small solar panels on commercial and residential units.

The Age of Artificial Intelligence

Governments in the Middle East have taken various policies and initiatives to develop and deploy AI-based technology. The adoption of AI is rising across different fields, including education, healthcare, finance, commerce, and related industries. Countries globally adopt AI for several operations.

The UAE and Saudi Arabia are two major Middle Eastern countries witnessing the large-scale adoption of AI.

The government of Oman is implementing AI projects through two programs, Oman 2030 and Vision 2040. These programs aim to provide education and training and develop research facilities for the adoption of AI.

Two policies, Vision 2035 and New Kuwait 2035, were formulated in Kuwait as part of the AI initiative. This initiative also includes utilizing AI and related technologies to increase job opportunities.

The government of Bahrain announced the Digital Strategy 2022 to develop AI and its applications. The AI Academy was established in the country as part of this strategy.

5G Deployments & Edge Facilities Gaining Momentum

Edge data centers are small, decentralized facilities that offer services like computing and storage and are strategically located closer to the end users where data is generated and consumed. Unlike cloud facilities, edge facilities are known to reduce latency and optimize bandwidth, facilitating the deployment of new applications.

The UAE was the first in the region to offer 5G services by May 2019, followed by Kuwait, Bahrain, and Qatar a few months later in July, and then Saudi Arabia in October of the same year. Israel did it in September 2020, whereas Iran and Oman about a year later in July 2021.

Middle Eastern countries work toward adopting digital transformation to attract foreign investments. 5G network deployment fuels digital transformation, IoT, smart cities, and the fourth industrial revolution. The rapid investment in 5G technology increases the demand for high-bandwidth internet in Tier II and III cities, thereby leading to the generation of a substantial amount of data, further driving data center development to process the information. 5G network services play a crucial role in supporting enterprise digitalization and will drive the adoption of IoT applications.

Saudi Arabia has about 11.2 million 5G subscribers as of March 2023, 42.8% of the overall 5G subscriptions in the Middle East region.

The Telecommunications Regulatory Authority (TRA) plans to reach and achieve 100% 5G coverage in the UAE by 2025.

In July 2023, Tonomus launched a new facility in the Saudi Arabian cognitive city of Neom. The facility would be a high-capacity, highly efficient data center to facilitate 5G, satellite, and fiber connectivity.

SEGMENTATION INSIGHTS

The Middle East data center market comprises segments like electrical, mechanical, and general construction, the latter of which has many interconnected and interdependent sub-parts.

In a region known for its hot climate, cooling systems and techniques are crucial for cooling down data center facilities. Internal software and hardware, such as servers, computing devices, and other equipment, must be cooled as they work continuously to manage millions of data center operations daily.

Data center operators need to ensure that the facility remains operational at all times. Proper power backup facilities, such as UPS systems and generators, are essential. The Middle East data center market uses sustainable energy sources like EcoDiesel, biofuel, natural gas, and other environmentally friendly options to power these backup systems.

The physical security of data centers is also critical. Adopting multifactor authentication systems, perimeter fencing, facial recognition technology, and other such measures have made great strides in that area.

Segmentation by Infrastructure

IT Infrastructure

Electrical Infrastructure

Mechanical Infrastructure

General Construction

Segmentation by IT Infrastructure

Server Infrastructure

Storage Infrastructure

Network Infrastructure

Segmentation by Electrical Infrastructure

UPS Systems

Generators

Transfer Switches & Switchgear

Power Distribution Units

Other Electrical Infrastructure

Segmentation by Mechanical Infrastructure

Cooling Systems

Racks

Other Mechanical Infrastructure

Segmentation by Cooling Systems

CRAC & CRAH Units

Chiller Units

Cooling Towers, Condensers, and Dry Coolers

Other Cooling Units

Segmentation by Cooling Techniques

Air-based

Liquid-based

Segmentation by General Construction

Core & Shell Development

Installation & Commissioning Services

Engineering & Building Design

Physical Security

Fire Detection & Suppression

DCIM

Segmentation by Tier Standard

Tier I & II

Tier III

Tier IV

GEOGRAPHICAL ANALYSIS

The UAE is an established market for data center development in the Middle East. The high internet and social media penetration, inland and submarine cable connectivity, strong regulatory framework, and tax incentives make it an attractive tax haven for investors.

Saudi Arabia is also among the second-highest data center destinations in the Middle East data center market. The market is witnessing the entry of global cloud operators setting up their dedicated cloud regions across the country.

The high adoption of cloud-based services helps increase Oman's retail and wholesale colocation services. The market witnesses increased demand for colocation spaces across existing and upcoming data centers.

Kuwait, Qatar, Bahrain, and Israel are also on the way to emerge among the leaders in adopting sophisticated technology, cutting-edge safety/control systems, and a good market share, with developments happening gradually.

Other Middle Eastern countries include Turkey, Iraq, Syria, Iran, and Yemen. The region is experiencing a surge in data center demand due to the adoption of technology and digitalization.

The Middle East region has a high potential for growth in niche fields such as AI, sustainable energy resources, smart city development, and more. This encourages the construction of more data centers and supports the Middle East data center market.

Segmentation by Geography

Middle East

• UAE
• Saudi Arabia
• Israel
• Qatar
• Oman
• Kuwait
• Bahrain
• Jordan
• Other Middle Eastern Countries

VENDOR LANDSCAPE

Equinix, center3 (stc), Gulf Data Hub, Mobily, Khazna Data Centers, Ooredoo, and others are among the current significant investors in the Middle East data center market.

Support infrastructure vendors in the Middle East data center industry, including ABB, Schneider Electric, Siemens, Eaton, Johnson Controls, and Vertiv. These companies have a strong global presence and operate across the Middle East. They operate directly in some prominent countries with existing and ongoing ventures, while in others, they operate through channel partners and distributors, competing with local vendors in their respective countries.

Notable construction contractors in the Middle East data center market include McLaren Construction Group, HHM Building Contracting, AECOM, ENMAR Engineering, Anel Group, Turner & Townsend, and many others.

Key IT Infrastructure Providers

Arista Networks

Atos

Broadcom

Cisco Systems

Dell Technologies

Fujitsu

Hewlett Packard Enterprise

Hitachi Vantara

IBM

Inspur

Lenovo

NetApp

Prominent Support Infrastructure

ABB

Airedale

Alfa Laval

Canovate

Caterpillar

Cummins

Delta Electronics

EAE Group

EATON

Enrogen

Envicool

Generac Power Systems

HITEC Power Protection

Johnson Controls

Legrand

Piller Power Systems

Rittal

Rolls-Royce

Schneider Electric

Siemens

STULZ

Vertiv

Prominent Construction Contractors

AECOM

ALEC Data Center Solutions

Aldar Properties

Al Latifia Trading & Contracting

Anel Group

Arup

Ashi & Bushnag

ASU

Atkins

Azura Consultancy

Black & White Engineering

Capitoline

Core Emirates

Dar Group

DC Pro Engineering

Deerns

Edarat

EGEC

ENMAR Engineering

Group AMANA

Harinsa Qatar

HATCO

HHM Building Contracting

Hill International

ICS Nett

INT’LTEC

ISG

Juffali Airconditioning, Mechanical, and Electrical Company (JAMED)

James L. Williams (JLW)

John Paul Construction

Laing O’Rourke

Laith Electro Mechanical

Linesight

M+W Group (Exyte)

Mace

McLaren Construction Group

Mercury Engineering

Middle East Modern Architecture (MEMA)

MIS

NDA Group

Prota Engineering

Qatar Site & Power

Raghav Contracting

RED Engineering

RW Armstrong

SANA Creative Systems

Site & Power DK

Sudlows

Telal Engineering & Contracting

Turner & Townsend

UBIK

Prominent Data Center Investors

Adgar Investments and Development

Amazon Web Services (AWS)

Batelco

Bynet Data Communications

center3 (stc)

EdgeConneX

Equinix

Gulf Data Hub

Google

Huawei Technologies

Khazna Data Centers

MedOne

MEEZA

Microsoft

Mobily

Moro Hub

Oman Data Park

Ooredoo

Oracle

Serverfarm

Telehouse

TONOMUS (ZeroPoint DC)

Turkcell

Turk Telekom

New Entrants

Agility

Compass Datacenters

Digital Realty

Edgnex Data Centres by DAMAC

Global Technical Realty

Quantum Switch Tamasuk

KEY QUESTIONS ANSWERED:

1. What are the key trends in the Middle East data center industry?

2. What is the growth rate of the Middle East data center market?

3. How big is the Middle East data center market?

4. What is the estimated market size in terms of area in the Middle East data center market by 2029?

5. How many MW of power capacity is expected to reach the Middle East data center market by 2029?