Saudi Arabia is expected to be at the forefront of the data centre revolution in the region: JLL

Riyadh: Gulf Tech News

• Whitepaper released on the sidelines of Cityscape Global in Riyadh highlights Saudi Arabia as a key contributor to the growth of data centres in the region
• Data centre investments expanding beyond Riyadh, Jeddah and Dammam to include the new smart city, Neom, supported by its USD 500 million hyperscale data centre investment
• Quantum Switch Tamasuk to develop six new facilities across the Kingdom with a power capacity reaching 300 megawatts by 2026
• In line with Vision 2030 to position Saudi Arabia as a regional ICT and data centre hub, the country launched USD 18 billion strategy to partner with investors and establish a nationwide network of large-scale data centres in the Kingdom

The governments’ push towards digital transformation has been fueling demand for data centres in the Middle East and Africa region as they provide the necessary infrastructure for creating digital economies. That said, Saudi Arabia is expected to be one of the prime countries leading the data centre evolution in the region, outpacing other regional counterparts in the future with around 40 data centres in the pipeline, revealed JLL in a whitepaper released on the sidelines of Cityscape Global in Riyadh.
The whitepaper, titled ‘Unleashing the Potential: The Future of Data Centres in the Middle East and Africa’, highlighted the critical strides Saudi Arabia has made with its digital transformation strategy and smart city initiatives, which is placing the Kingdom at the forefront of data centre investments that are expected to rise exponentially in the coming years. Currently, some of the country’s key data centre operators include Mobily and STC.

Traditionally, data centre investments in the Kingdom have been mainly directed towards Riyadh, followed by Jeddah and Dammam. However, the areas of interest have been expanding, and more investments are projected to be pumped into Saudi Arabia’s new smart city, Neom, in the coming years. This is further supported by the city’s USD 500 million hyperscale data centre investment, launched in 2022, which aims to offer fast and reliable data centre services and connectivity to the country as well as the wider GCC market.

Furthermore, hyperscalers like Oracle Cloud, Google Cloud, and Microsoft have identified Saudi Arabia as a promising market for expanding their cloud services, which positions the Kingdom as a compelling investment opportunity in the region with immense potential for future growth and the establishment of cloud infrastructure.

Among data centre investments, Quantum Switch Tamasuk plans to develop six new facilities across the Kingdom with a power capacity that would reach around 300 megawatts by 2026. This expansion of data centre capacity is on the back of Vision 2030 and the government’s push to make the country the main Information and Communication Technology and data centre hub in the region. To support its goal, Saudi Arabia has launched a USD 18 billion strategy to partner with local and international investors and establish a nationwide network of large-scale data centres.

Additionally, there is an increase in collaborative partnerships between developers and Sovereign Wealth Funds in the Middle East. Earlier this year, DigitalBridge announced plans to expand its footprint in the region by forming a partnership with the Saudi sovereign wealth fund, the Public Investment Fund (PIF), to develop new data centres across Saudi Arabia.

“Today, data is critical to drive economic growth and societal progress, with global and regional data centre operators looking to the Kingdom of Saudi Arabia due to its strategic location, favourable government policies, growing demand for 5G networks, cloud computing and other digital services. As part of its Vision 2030, Saudi Arabia is also continuously developing the skills of its workforce to align with the needs of the digital economy,” said Saud Alsulaimani, KSA Country Head at JLL.

“Furthermore, the Kingdom is making significant strides in the field of artificial intelligence (AI) and has emerged as a key player in advancing its research, development, and applications by actively investing in AI technologies and capabilities. For instance, the Saudi Data and Artificial Intelligence Authority was established to accelerate AI adoption across government agencies and foster collaboration with the private sector. These proactive measures are helping the Kingdom to overcome any challenges and capitalise on opportunities to succeed in the rapidly growing data centre market,” he added.

Whilst the data centre market in the Middle East and Africa is still in its early stages of development, it is growing rapidly. The region is expected to be one of the fastest-growing data centre markets in the coming years, given its strong potential for expansion to bridge the gap between the limited supply and growing demand. At present, around 73 colocation facilities are operational across Saudi Arabia, UAE, Qatar, Oman and Kuwait.