Investment to develop GCC data centers is expected to grow in 2023 as international players commit further spending in the region.
Saudi Arabia has already emerged as a hotspot for data center projects early in 2023.
Microsoft said earlier in February 2023 it will build a new data center and Azure cloud region in Saudi Arabia.
The announcement was made during the LEAP 2023 conference in Riyadh. Details of the data centers’ location, specifications, or timelines have yet to be shared.
However, Microsoft has confirmed the new cloud region will offer “enterprise-grade reliability and performance combined with customer privacy, data residency, and high-speed latency standards in Saudi Arabia”.
Dubai developer Damac Properties’ Damac Data Centers business will also launch facilities in Dammam and Riyadh this year.
READ MORE: Microsoft, Saudi could generate USD24 bn from cloud regions
The company announced at LEAP 2023 that a further 35 megawatts (MW) of IT capacity will be built. Damac already has 20MW of capacity under construction.
Both of Damac’s facilities will deliver a full 55MW of IT capacity by 2025. The company is investing $600 million (SR2.2 billion) in Saudi Arabia as part of its $1 billion investment strategy.
Saudi Aramco has also partnered with teleconferencing giant Zoom to build its first global data center in the country. The center is expected to serve the wider Middle East region.
GCC data centers: growth drivers
The GCC data center market is expected to grow at a compound annual growth rate of 8.14 percent from between 2022 and 2028.
Government initiatives are a key factor driving data center demand. Reportlinker said in January 2023 the region is witnessing the adoption of cloud services as the governments adopt policies for implementing cloud services.
“Government initiatives for developing the GCC data center market include the steps taken to reduce the price of the land to promote investment in the country,” according to the report.
“For instance, the Oman government reduced the cost of the land to facilitate the investment of the data centers in the country.
READ MORE: Huawei lifts enterprises to stratospheric heights
“The Arab League Digital Economy Federation signed a memorandum of understanding with ATDXT, a UAE-based digital transformation company, to build a new regional facility to promote digital transformation across the Gulf region. The expansion of cloud regions by hyperscale operators and internet service providers is fueling the region’s significant demand for data center investments.”
Regional outlook
The GCC data centers market is estimated at more than $1.3 billion and expected to reach $5.23 billion by 2028, according to Ashraf Yehia, managing director at Eaton Middle East. According to Reportlinker, Saudi Arabia is dominating the GCC data center market in terms of IT load.
The number of GCC data centers is expected to grow in 2023. Bahrain announced the launch of the region’s first data center park in partnership with the telecommunication company stc Bahrain in March 2022.
READ MORE: stc Group launches Center3 to enhance digital economy growth in Saudi
The park will be developed on 55,000 square meters of land in Al-Qurain.
In August 2022, Qatari telco Ooredoo broke ground on three data centers in Oman Barka, Salalah, and Sohar. In the same month, Microsoft announced the launch of its new data center region in Qatar.
It is widely agreed that the UAE is currently the most advanced regional technology market for investments in data centers in the GCC.
“Data centers have become one of the world’s most valuable resources as they enable e-commerce, cloud computing, and remote work, and also drive the global economy,” Khazna Data Centres CEO Hassan Alnaqbi told local media in October.
“Due to the staggering amounts of data generated around the clock, the UAE will see more investments in data center infrastructure as businesses are increasingly aware of the need to manage data and information efficiently and cost-effectively.”
