Middle East Data Center Market Landscape 2023-2028

MARKET OUTLOOK

The Middle East data center market will witness investments of USD 7.94 billion by 2028, growing at a CAGR of 8.53% during the forecast period. The presence of industrial parks, the availability of land, and the government's support motivate operators to develop data centers in Middle Eastern countries. For instance, the Government of Bahrain announced the launching of its first data center park, which includes the development of its first data center by stc Bahrain through collaboration with the Ministry of Transport and Telecommunications.

KEY TRENDS

Increase in 5G Deployments Fueling Edge Data Center Investments
Middle Eastern countries are working toward adopting digital transformation to attract foreign investments. 5G network deployment fuels the digital transformation, IoT, smart cities, and the fourth industrial revolution. The rapid investment in 5G technology increases the demand for high-bandwidth internet in Tier II and Tier III cities, thereby leading to the generation of a substantial amount of data, further driving data center development to process the information. 5G network services play a key role in supporting enterprise digitalization and will drive the adoption of IoT applications.

Some telecom operators in the Middle East data center market have deployed 5G network services; some are in 5G trials. Middle Eastern countries such as the UAE, Saudi Arabia, Oman, Kuwait, Bahrain, and Qatar commercially deployed 5G network services. Turkey, Israel, Jordan, Lebanon, and Iran are other Middle Eastern countries in 5G planning and are yet to deploy commercial services during the forecast period.

Growing Smart City Developments Will Drive the Demand for Advanced Technologies
Smart city initiatives further emphasize the importance of data in improving communication among cities, citizens, automobiles, electronics, and devices. A well-designed smart city allows for data-driven decision-making, newer economic opportunities, and improved infrastructure.

In the Middle East, several companies and governments have taken the initiative to invest in developing smart cities. Middle Eastern countries are driving the adoption of advanced technologies, 5G services, IoT, big data solutions, and digital platforms. In addition, the number of interconnected devices in the region is increasing significantly, with growth in the deployment of subsea and inland cables.

SEGMENTATION INSIGHTS

• The Middle East data center market under the IT infrastructure segment generated major revenue from servers as the growth in data generation is fueling the demand for faster processing and efficient servers. This is followed by revenue from storage due to the growing adoption of flash storage among data centers and network infrastructure revenues such as switches with ports of up to 100GbE.
• The electrical infrastructure segment in the Middle East data center market is dominated by investments in UPS systems, followed by generator systems that are majorly being adopted by diesel-powered engines.
• Several local and global construction contractors exist in the industry, such as AECOM, Aldar Properties, Anel Group, Dar Group, Hill International, and others. The industry is witnessing greenfield developments across several countries aided by ample availability of land resources.

GEOGRAPHICAL ANALYSIS

• Regarding geography, the Middle East data center market is dominated by investments in markets such as UAE and Saudi Arabia, which are among the region's most mature markets, followed by Israel.
• Several regional emerging locations, such as Oman, Qatar, and others, have witnessed steady data center investment growth. Other regional markets are also expected to witness growth in the coming years, aided by digitalization, technology penetration, connectivity growth, and other factors.

VENDOR LANDSCAPE

• The Middle East data center market has several global support infrastructure providers with expertise in providing OCP scale infrastructure. Some of the support infrastructure providers in the industry include ABB, Airedale, Alfa Laval, Delta Electronics, Cummins, Caterpillar, and others.
• The industry has major dominance of local investors such as Morohub, Gulf Data Hub, Khazna Data Centers, and others, with several global investors such as Google, Microsoft, Equinix, and Tencent.
• The industry has witnessed the entry of several new local and global investors, such as Damac Data Centres, Quantum Switch Tamasuk, Digital Realty, and others.