UAE’s IT capacity dominates MENA data centre landscape

The United Arab Emirates has recorded a 15.3% increase in live IT capacity in 2023, reaching 235.3MW, making it the largest data centre hub in the MENA region, according to Knight Frank‘s Data Centres MENA report. This increase is part of a wider expansion, with a 64MW rise in aggregate supply, or a 12.1% growth. Currently, the UAE boasts a total IT capacity of 592MW, including 180.3MW that is actively under construction, underscoring the nation’s strategic expansion of the technology sector.

The MENA region is experiencing a significant surge in demand for data centres, driven by several factors, such as the rise in digitisation, resilient connectivity needs, and the widespread adoption of cutting-edge technologies. The UAE emerges as a pivotal player in this landscape, hosting the largest concentration of data centres in the Middle East.

Knight Frank’s report finds that blockchain increasingly features transactions in the UAE, showcasing the country’s commitment to technological advancements. Artificial intelligence (AI) is also anticipated to bring substantial benefits and growth to the Middle East’s Gulf Cooperation Council (GCC), as the technology matures and usage increases. These ‘next wave’ technological advances will accelerate the need for a robust digital foundation.

Sustainability takes centre stage in the region’s positioning, which is evident in projects such as the Dubai Electricity and Water Association (DEWA) innovation hub — a 1.2GW solar farm underway to support sustainability initiatives.

Across the UAE, major players like Gulf Data Hub, Khazna Data Centres, Morohub, Equinix, and Microsoft actively contribute to this growth through expansion projects and partnerships. As the UAE continues to ease regulations and support investments in digitalisation, projects like the ‘Smart City Strategy’, the region is poised to witness an unprecedented demand for digital infrastructure and data centres.

Stephen Beard, Co-Head of Global Data Centres at Knight Frank, says, “In the dynamic MENA market, data centres are in high demand, and growth is not a matter of ‘if’ but ‘when’. The infrastructure is ready, and expansion opportunities abound through brownfield development or M&A.

“There is a burgeoning enterprise market. With most existing and newly created OpCo’s pivoting towards hyperscale BTS, there is ample room for traditional colocation customers to develop and provide true colocation space.

“Across the Middle East, over a quarter of the population is between 15 and 29 years of age. This section of the population is important to future data centre growth, as it comfortably embraces technology for a broad spectrum of educational, professional and social needs. Therefore, the demands placed on data centre services will only increase, making it a prime opportunity for Knight Frank to contribute to this exciting growth.”

The MENA region encompasses neighbouring countries like Saudi Arabia, Egypt, Bahrain, Jordan, Kuwait, Lebanon, Oman, and Qatar, all witnessing increasing interest in their respective data centre sectors.

Stephen Beard concludes, “As of Q3 2023, these nations collectively represent a live IT capacity of 101.17MW, with steady economic growth indicated by an average annual GDP growth of 21.98% and a CAGR GDP forecast for the region at 5.47% through 2028.

“Markets like Bahrain, Jordan, Kuwait, Lebanon, Oman, and Qatar are experiencing data centre growth, anticipating a need for 500MW and an investment of approximately c.$5bn over the next seven to nine years. What’s striking is the convergence of factors that drive this expansion, such as, government support, digital investments, and a steadfast commitment to diversification. Collectively, these nations exemplify the region’s unwavering dedication to technological advancement. With expanding IT capacity and a promising economic outlook, the horizon for data centres in the MENA region shines brilliantly.”