How the UAE is leading the region’s data centre growth

The UAE has firmly established itself as a leader in driving the data centre evolution in the Middle East.

That’s according to a new report from JLL MEA, a leading player in the real estate and hospitality services market with a presence in 35 regional countries.

While recognising the region is still in early development with just 73 colocation facilities operational across the UAE, Saudi, Qatar, Oman and Kuwait, the report points to rapid growth ­– with the Middle East expected to be one of the fastest-growing data centre markets in the coming years.

“In 2022, the Middle East data centre market was valued at a whopping US$4.8 billion – and it’s not expected to slow down,” says Fadi Moussalli, Head of Capital Markets MENA at JLL.

In fact, predictions suggest an 8.5% average growth rate from 2023 to 2028 to reach a staggering US$28 billion by 2027.

Among key players, Abu Dhabi-based Khazna, one of the Middle East’s largest data centre operators, and US multinational Equinix, are accelerating this momentum, with the former aiming to achieve a total planned capacity of 300 megawatts by adding 12 new facilities to its portfolio in just two years.

Hyperscalers are shaping the regional data centre market, JLL reports, with the Middle East attracting substantial investments from top hyperscalers and major cloud provides such as AWS and Microsoft.

Leading the data centre charge regionally is the UAE.

UAE takes lead in data centre domination

The report recognises Dubai and Abu Dhabi as the country’s prime data centre markets and two of the smartest cities ­– not just in the region but among the top 20 globally, according to the latest Institute for Management Development’s Smart City Index.

This comes as the UAE government pushes towards digital transformation, with the aim of transforming itself into a strong digital economy, the country and region look ripe for growth.

The UAE has around 28 active co-location facilities, and is currently home to the largest presence of hyperscalers in the region – not to mention numerous data centres and cloud providers seeking to expand a footprint in the emirates.

These companies have announced novel cloud availability zones slated for deployment through their data centres in the country, augmenting business competitiveness by providing advanced architecture and robust end-to-end security for seamless business operations and reliable disaster recovery solutions.

“At a time when data has come to define the parameters of innovation, efficiency, and competitiveness, not only in real estate but across industries, the UAE is boldly leading the charge in the data centre domain in the region,” says Faraz Ahmed, Associate, Research at JLL MENA.

UAE digital strategy fuelling demand for data centres

According to the report, the UAE is seen as an attractive destination for data centre investments, with investors viewing it as a safe and dependable option.

As well as offering an outstanding internet penetration rate of more than 98%, the UAE has also gained recognition as the regional AI innovation hub – with the world’s first AI minister and dedicated AI university, and driven by progressive initiatives such as Smart Dubai and Dubai Artificial Intelligence in Health.

On the back of such a strong AI strategy, the country is looking to incorporate AI into various sectors, from healthcare to transportation to government services.

“Through strategic investments in smart city infrastructure, a robust AI strategy, and a visionary approach to talent development, the country is not only becoming an investment hub; it is positioning itself for even greater success ahead.” He adds.

Faraz points to initiatives like the ‘National Cybersecurity Strategy’ which he says further underlines the UAE’s commitment to digital trust, making it not only a regional data centre leader but also a bastion of security and reliability.

“With each stride in innovation, the UAE propels itself to new heights of digital excellence and economic vitality. It is clear that its current momentum will only accelerate, cementing its standing in the realm of data centres and strengthening the region’s position on the global stage,” he added.