GCC Data Center Market Growth Insights – Market Area to Reach 2.79 Million Sq. Ft. and Power Capacity to Exceed 701 MW by 2031, Driven by Smart City Investments, AI & Cloud Adoption, and Expanding Digital Infrastructure Across Saudi Arabia, the UAE & Qatar (2026–2031)

GCC Data Center Market – Industry Outlook & Forecast 2026-2031

GCC DATA CENTER MARKET SIZE & INSIGHTS

The GCC data center market size witnessed investments of USD 5.46 billion in 2025 and will witness investments of USD 15.39 billion by 2031, growing at a CAGR of 18.85% during the forecast period. The GCC region is witnessing growing demand for data centers, driven by rapid digital transformation across governments, enterprises, and consumer sectors. This shift is increasing the need for secure data storage, cloud services, and high-speed digital infrastructure. Countries such as Saudi Arabia, the UAE, and Qatar are investing heavily in smart cities, e-government, AI, fintech, and e-commerce, further strengthening the need for localized and scalable data center infrastructure.

The average cost of developing a data center in the GCC typically ranges from $7 million to $11 million per MW, depending on the location. These elevated costs are influenced by limited land availability, high labour expenses, inflationary pressures, and difficulties in securing reliable power access. Consequently, operators are increasingly evaluating markets that offer lower construction costs, adequate land and power availability, and favourable regulatory support for more cost-efficient data center expansion.

The GCC data center market continues to attract large-scale investments. For example, in September 2025, Qatar Investment Authority partnered with Blue Owl Capital to establish a $3 billion global digital infrastructure platform, primarily focused on investing in data center development and expansion worldwide.

From an investment perspective, events like war create short-term uncertainty and heighten risk perception among global investors. Some operators have indicated that they have paused or reassessed their planned investments in the region because of these events. Concerns about geopolitical stability and the vulnerability of infrastructure can delay decision-making for new projects. This may temporarily slow down the pace of hyperscale expansion in the affected markets.

GCC DATA CENTER MARKET KEY TRENDS

Sustainability Initiatives and Renewable Energy

1. Sustainability efforts across GCC data center markets are increasingly centered on renewable energy integration, enhanced energy efficiency, and better resource optimization to meet growing digital demand and challenging climatic conditions. Governments and operators are investing in solar-powered infrastructure, advanced cooling solutions such as liquid and district cooling, and adopting standards like LEED and Estidama to lower carbon emissions and reduce water usage, supporting the region’s transition toward greener data center infrastructure.
2. In November 2024, the Sharjah Communication Technology Authority (SCTA) signed a Memorandum of Understanding (MoU) to join the joint venture between BEEAH and Khazna Data Centers in developing data centers in Sharjah, UAE. The three parties are currently exploring the use of waste-to-energy as a power source, implementing greywater recycling systems, and integrating technologies aimed at minimizing energy consumption (as part of their commitment to sustainability).
3. In November 2024, Microsoft, ADNOC, and Masdar signed a strategic collaboration agreement to explore powering Microsoft’s data centers with renewable energy through Masdar’s portfolio. This is a public renewable-power arrangement linked to UAE data center growth.

Increased Adoption of AI, Automation and Digitalization

1. The growing adoption of AI, automation, and digitalization across GCC economies is substantially increasing demand for data centers, as enterprises and governments require high-performance computing (HPC), real-time data processing, and scalable cloud infrastructure to support smart city developments, digital platforms, and advanced analytics applications.
2. Saudi Arabia’s National Strategy for Data and Artificial Intelligence (NSDAI), which is led by the Saudi Data & AI Authority, aims to establish Saudi Arabia as one of the global leaders in Artificial Intelligence (AI) development by 2030 through various initiatives including encouraging massive investments for AI development in the country, developing advanced AI infrastructure including Project NEOM, developing talent with AI skills, as well as integrating AI across key sectors such as healthcare, education, government, and finance.
3. In June 2025, the Kuwait Investment Authority (KIA) announced its decision to join Microsoft and BlackRock to invest around $30 billion in building AI data center infrastructure in Kuwait.

GCC DATA CENTER MARKET SEGMENTATION INSIGHTS

1. Vendors continuously innovate with UPS solutions to augment efficiency and reduce costs. The Muscat data center by Cloud Acropolis has four 200 kW online conversion UPS systems. The Gateway Gulf facility in Riyadh offers fault-tolerant 2(N+1) UPS systems as a backup.
2. Additionally, several innovative UPS batteries such as Nickel-Zinc (NiZn) and Sodium-Ion batteries, are gaining traction in the market due to their high power density, safety, sustainability, and other factors.
3. Liquid cooling is becoming a significant trend that major colocation operators are implementing in their data center facilities. It is emerging as a key differentiator for colocation providers as AI and compute-intensive workloads continue to grow. The HPE managed hosting service for AI in the UAE would run on a Khazna Data Centers facility with direct liquid cooling. The AUH01 facility of Pure Data Centres Group in Abu Dhabi utilises hybrid air and liquid cooling systems.

GCC DATA CENTER MARKET GEOGRAPHICAL ANALYSIS

1. In the GCC data center market, Saudi Arabia is expected to be the largest market in 2031 in terms of power capacity, with a share of around 41.37% in 2031.
2. By early March 2026, a major wave of attacks affected data center infrastructure in the UAE and Bahrain, disrupting cloud services and exposing vulnerabilities in critical power and connectivity systems. The incident highlighted that civilian digital infrastructure is increasingly vulnerable during geopolitical conflicts, shifting risk perception across the GCC market. As a result, operators are expected to strengthen resilience, redundancy, and security measures, while some planned and under-construction facilities may face delays and require additional capital investment due to heightened risk and infrastructure protection costs.
3. The UAE continues to reinforce its position as a leading and strategically significant data center market in the Middle East, with Dubai and Abu Dhabi serving as key hubs for hyperscale and colocation expansion. Growth is being supported by rising cloud adoption, ongoing digital transformation across government and enterprises, and the country’s strategic location as a major connectivity gateway between Asia, Africa, and Europe.
4. As of September 2025, Bahrain hosts around five submarine internet cables: 2Africa, FALCON, Fiber Optic Gulf (FOG), Gulf Bridge International Cable System/Middle East North Africa Cable System (GBICS/MENA), and Tata TGN-Gulf. These cables connect Bahrain to other countries around the globe. In addition, the country is witnessing growth in connectivity with submarine cables. The two submarine cables being developed are slated to be operational during the forecast period.

GCC DATA CENTER MARKET VENDOR LANDSCAPE

1. The GCC data center market has the presence of key investors such as Alibaba Group, AWS, Batelco, center3, Cloud Acropolis, Core42, DAMAC Digital, Equinix, Google, Gulf Data Hub, Khazna Data Centers, MEEZA, Microsoft, Mobily, Oman Data Park, Ooredoo, Pure Data Centres, Quantum Switch, Sahayeb Data Centers, Syntys, Tonomus and others.
2. The GCC data center market continues to attract large-scale investments from major operators. For example, in October 2025, AirTrunk, an APAC data center firm, entered into a strategic partnership with HUMAIN, a Saudi Arabian company, to build multiple data centers across Saudi Arabia; the two companies collaboratively aim to invest around $3 billion to develop advanced data centers and enhance Artificial Intelligence (AI) infrastructure across the country.
3. The market is witnessing strong participation from new entrants with large-scale investments. For instance, in February 2025, DataVolt announced plans to develop a new AI-ready data center facility in Riyadh, while also planning a major 1.5 GW IT power capacity data center project in Neom, Saudi Arabia.