The demand for data center services in the Gulf Cooperation Council (GCC) is experiencing a surge, with Saudi Arabia and the United Arab Emirates (UAE) leading the charge. This growth is attributed to several factors, including government initiatives focused on building robust digital economies, the rising adoption of emerging technologies like the Internet of Things (IoT) and Artificial Intelligence (AI), and the presence of major international cloud service providers.
A recent report by Turner & Townsend, a global professional services company, highlights the significant growth projected in the region's data center market, expected to double in size by the end of the decade. This expansion is driven by both Saudi Arabia and the UAE, which are at the forefront of cloud service adoption within the seven GCC countries, also comprising Bahrain, Kuwait, Oman, and Qatar.
The report underscores the strategic efforts undertaken by the governments in the region to foster digital transformation. These initiatives include investments in infrastructure, promoting entrepreneurship and innovation, and embracing disruptive technologies. The increasing use of IoT devices and AI solutions across various sectors, from healthcare and finance to manufacturing and transportation, is creating a significant demand for secure and reliable data storage and processing capabilities.
Furthermore, the presence of major international cloud service providers like Microsoft Azure, Google, Amazon Web Services (AWS), and Oracle is further propelling the growth of the data center market. The establishment of Azure Availability Zones in the UAE, Google collaborations with local partners, and planned AWS and Oracle Zones in Saudi Arabia are creating a robust ecosystem for cloud services and data storage solutions. This not only caters to the domestic demand but also positions both countries as strategic hubs for regional and global data traffic flow, connecting Europe, Asia, and Africa.
The data center industry in the Middle East is still evolving, and according to the report, year-on-year cost inflation is a notable trend. Riyadh, the capital of Saudi Arabia, has emerged as a new entrant in the cost index with an average cost of US$10 per watt. This reflects the growing demand and the need for continued infrastructure development to meet the region's expanding data storage needs.
The combined efforts of government initiatives, technological advancements, and strategic partnerships with international players are shaping the data center landscape in the GCC. With Saudi Arabia and the UAE at the forefront, the region is poised to become a significant player in the global data center market, offering robust solutions and fostering innovation in the digital age.