UAE largest data centre hub in MENA region

The United Arab Emirates records a 15.3% increase in live IT capacity in 2023, reaching 235.3MW, making it the largest data centre hub in the MENA region, according to Knight Frank's Data Centres MENA Report. This increase is part of a wider expansion, with a 64MW rise in aggregate supply, or a 12.1% growth. Currently, the UAE boasts a total IT capacity of 592MW, including 180.3MW that is actively under construction, underscoring the nation's strategic expansion of the technology sector.

The MENA region is experiencing a significant surge in demand for data centres, driven by several factors, such as the rise in digitisation, resilient connectivity needs, and the widespread adoption of cutting-edge technologies. The UAE emerges as a pivotal player in this landscape, hosting the largest concentration of data centres in the Middle East.

Knight Frank's report finds that blockchain increasingly features transactions in the UAE, showcasing the country's commitment to technological advancements. Artificial intelligence (AI) is also anticipated to bring substantial benefits and growth to the Middle East's Gulf Cooperation Council (GCC) as the technology matures and usage increases. These 'next wave' technological advances will accelerate the need for a robust digital foundation.

Sustainability takes centre stage in the region's positioning, which is evident in projects such as the Dubai Electricity and Water Association (DEWA) innovation hub—a 1.2GW solar farm underway to support sustainability initiatives.

Across the UAE, major players like Gulf Data Hub, Khazna Data Centres, Morohub, Equinix, and Microsoft actively contribute to this growth through expansion projects and partnerships. As the UAE continues to ease regulations and support investments in digitalisation projects like the 'Smart City Strategy,' the region is poised to witness an unprecedented demand for digital infrastructure and data centres.

Stephen Beard, Co-Head of Global Data Centres at Knight Frank, said: “In the dynamic MENA market, data centres are in high demand, and growth is not a matter of 'if' but 'when.' The infrastructure is ready, and expansion opportunities abound through brownfield development or M&A.

“There is a burgeoning enterprise market. With most existing and newly created OpCo's pivoting towards hyperscale BTS, there is ample room for traditional colocation customers to develop and provide true colocation space.

“Across the Middle East, over a quarter of the population is between 15 and 29 years of age. This section of the population is important to future data centre growth as it comfortably embraces technology for a broad spectrum of educational, professional, and social needs. Therefore, the demands placed on data centre services will only increase, making it a prime opportunity for Knight Frank to contribute to this exciting growth."

Saudi Arabia Emerges as the Fastest-Growing Data Centre Market

Saudi Arabia is experiencing rising data centre development growth, primarily propelled by the government's 'Vision 2030' initiative to diversify the national economy. Live IT capacity in Saudi Arabia has surged by 29.7% to 109MW since the beginning of the year, making it the fastest-growing data centre market in the Middle East.

The data centre market in Saudi Arabia is concentrated in three main hubs – Riyadh, Jeddah, and Dammam, hosting 80% of the live IT supply. Key developments, including Center3's expansion in Khurais, Toromus's new data centre in Dammam, and Huawei's plans for a cloud data centre in Riyadh, contribute to the country's expanding data centre landscape.

Egypt – An Emerging Region

Egypt has experienced a substantial increase in aggregate supply, reaching 154.7MW in Q3 2023, reflecting a 133MW increase over 12 months. Major announcements include Khazna Data Centres' development plans for a US$250 million state-of-the-art facility in Cairo, Gulf Data Hub and Elsewedy Data Centres' joint venture investing a combined US$2.1 billion across three locations in Egypt, and Global GPX's 12MW expansion plan for its Cairo 2 facility.

Wider Region Experiences Heightened Interest

The MENA region extends beyond the five highlighted markets, encompassing neighbouring countries like Bahrain, Jordan, Kuwait, Lebanon, Oman, and Qatar, all witnessing increasing interest in their respective data centre sectors. Bahrain and Jordan strategically position themselves as regional technology hubs, experiencing growth driven by government-supported initiatives, prioritisation of cloud services, and partnerships with global technology entities.

Stephen Beard concludes: "As of Q3 2023, these nations collectively represent a live IT capacity of 101.17MW, with steady economic growth indicated by an average annual GDP growth of 21.98% and a CAGR GDP forecast for the region at 5.47% through 2028.

“Markets like Bahrain, Jordan, Kuwait, Lebanon, Oman, and Qatar are experiencing data centre growth, anticipating a need for 500MW and an investment of approximately c.$5 billion over the next 7-9 years. What's striking is the convergence of factors that drive this expansion - government support, digital investments, and a steadfast commitment to diversification. Collectively, these nations exemplify the region's unwavering dedication to technological advancement. With expanding IT capacity and a promising economic outlook, the horizon for data centres in the MENA region shines brilliantly."