Middle East Data Center Market SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS UP TO 2030

Middle East Data Center Market Analysis

The Middle East Data Center Market size is estimated at 1.46 thousand MW in 2025, and is expected to reach 3.23 thousand MW by 2030, growing at a CAGR of 17.25%. Further, the market is expected to generate colocation revenue of USD 1,576.3 Million in 2025 and is projected to reach USD 4,702.9 Million by 2030, growing at a CAGR of 24.44% during the forecast period (2025-2030).

The Middle East data center landscape is undergoing rapid transformation driven by ambitious digital initiatives and smart city developments across the region. Government-led digital transformation programs are reshaping modern communities, with the United Arab Emirates emerging as a frontrunner in establishing a competitive digital economy. The UAE's commitment to digital advancement is evident through its impressive internet penetration rate of 99.0% as of early 2022, positioning it as a prime location for data center investments. Qatar's industrial sector has demonstrated remarkable growth, with 60 new factories becoming operational and contributing over USD 15 billion to the GDP, highlighting the region's expanding digital infrastructure requirements.

The data center market is witnessing significant investments in sustainable and technologically advanced facilities. A notable development is the partnership between Khazna Data Centers and Masdar City to construct a ground-mounted solar photovoltaic plant, demonstrating the industry's commitment to renewable energy adoption. The trend toward green data centers is gaining momentum, with facilities incorporating innovative cooling systems and energy-efficient technologies. These developments align with the region's broader sustainability goals while addressing the growing demand for data processing and storage capabilities.

Strategic partnerships and consolidation activities are reshaping the competitive landscape. Major telecommunications providers and technology companies are forming alliances to strengthen their market presence and expand their service offerings. The merger between Etisalat Group and G42's data center offerings has created the largest data center provider in the UAE, highlighting the industry's move toward consolidation for enhanced operational efficiency. This trend is expected to continue as organizations seek to build more robust and scalable infrastructure solutions.

The industry is experiencing a shift toward higher-tier facilities and enhanced security protocols. Data centers are increasingly adopting advanced security measures and obtaining international certifications to meet the growing demands of enterprise clients. The rise of edge computing and the need for low-latency applications are driving the development of distributed data center networks across the region. These facilities are being designed with redundant power systems and advanced cooling technologies to ensure maximum uptime and operational efficiency, catering to the evolving needs of digital businesses and government initiatives.

Middle East Data Center Market Trends

Growing number of mobile users and expanding 5G population coverage across the regional countries boosts the market growth

• The GCC countries have experienced substantial changes in ICT use over the past two decades, resulting in a considerable impact on the services offered to users due to developing digital infrastructure. Internet and telecommunications services are much more common in the region than they are globally, especially in GCC, with the proportion of internet users to the total population in GCC reaching 98.21%, compared to the global average of 63%, which is practically the highest in all geographic areas.
• In GCC, the total number of mobile users makes up roughly 137.66% of the population, compared to the global average of about 55%. ICT services in the GCC region are developing quickly due to the region's continued influx of new commercial mobile service providers, causing a sharp rise in the number of users. Around two-thirds of wireless network operators in the Middle East launched 5G networks, expanding 5G population coverage across the regional countries. The majority of Middle Eastern countries have already implemented commercial 4G services.
• The increasing OTT consumption also boosted data traffic for each smartphone. For instance, Etisalat released its Life TV iOS app in 2013, a year after MBC's Shahid TV app surpassed it as the most downloaded Middle Eastern app. OSN revealed the debut of Go for non-pay TV users. In the Middle East, there are large regional differences in the accessibility and cost of super-fast networks. The deployment of various OTT platforms and speed improvements may result in a greater demand for rack space, leading to a rise in the number of data centers in the Middle East.

Prioritizing digital initiatives, such as 5G, digital payment and attracting sizable population of working immigrants boost the market demand

• To shift toward a knowledge-based economy, the UAE and Saudi Arabian governments are prioritizing digital initiatives, such as 5G. Due to state-wide consumer initiatives like digital payment, smartphones are leading the move to a digital lifestyle. The region's quick rebound of business and leisure travel, as well as permissive long-term visa policies like Golden Visas, which are stimulating investments across sectors from real estate to start-ups, are supporting the robust smartphone market recovery in the short term. International events, especially the FIFA World Cup in Qatar in 2022, may also present opportunities for various corporate sectors in neighboring nations.
• Though the region is attracting a sizable population of working immigrants, creating fresh demand for mass-market products, it is extremely wealthy. The Middle East accounts for more than half of global sales value except for Turkey. Apple and Samsung are the market leaders in the smartphone segment, accounting for approximately 96% of shipping volume combined.
• Device activations in the Middle East increased Y-o-Y, growing by an average of 23% in 2022. Larger markets like Iraq and Egypt, which continued to grow despite having enormous current user bases, were the main drivers of this expansion. The amount of raw data is expected to increase due to smartphone penetration and the use of 5G devices. The number of smartphone users may lead to the use of more data and the internet. The need for more data centers and higher regional utilization rates may boost the demand for the servers required to store and process the data.

OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT

• The increasing investments for the expansion of 5G network by Operators and region vision to grow digital by 2030 drives the growth of the market
• Transition to Fiber and GCC governments initiatives to roll out fiber optic cables nationwide trends boost the market demand
• Growing demand for the bandwidth, FTTH penetration, and Government initivatives to develop fiber Deployment drives the growth of the market

Segment Analysis: Data Center Size

Large Segment in Middle East Data Center Market

The large segment dominates the Middle East data center market, holding approximately 42% market share in 2024. This significant market position is driven by enterprises' preference for data centers with advanced features such as robust data security protocols, remote assistance capabilities, and cost-effectiveness. The segment's prominence is further strengthened by the strategic locations of large data centers across major cities, including Dubai, Abu Dhabi, Riyadh, Haifa, and Tel Aviv. These facilities primarily serve major cloud service providers, telecommunications companies, and financial institutions that require substantial computing power and storage capabilities while maintaining high security standards and operational efficiency.

Mega Segment in Middle East Data Center Market

The mega segment is emerging as the fastest-growing category in the market, expected to grow at approximately 45% during 2024-2029. This remarkable growth trajectory is primarily driven by the increasing adoption of streaming services, online gaming platforms, smart home automation devices, and smart city services across the Middle East region. The segment's expansion is further supported by large businesses' growing demand for data centers with high bandwidth capabilities, low latency requirements, and comprehensive disaster recovery solutions. The development of mega data centers is also aligned with various government initiatives and smart city projects across the region, particularly in the UAE and Saudi Arabia.

Remaining Segments in Data Center Size

The massive, medium, and small segments each play distinct roles in serving different market needs. The massive segment caters to organizations requiring extensive infrastructure for cloud services and large-scale data processing. The medium segment serves enterprises seeking balanced solutions with moderate capacity and reasonable costs, particularly appealing to regional businesses and government agencies. The small segment primarily addresses the requirements of small and medium enterprises (SMEs) looking for cost-effective data center solutions with basic infrastructure capabilities. These segments collectively provide a comprehensive range of options to meet diverse business requirements across the Middle East region.

Segment Analysis: Tier Type

Tier 3 Segment in Middle East Data Center Market

The Tier 3 segment dominates the Middle East data center market, accounting for approximately 69% of the total market share in 2024. This significant market presence is attributed to the segment's high level of redundancy and multiple power and cooling paths, offering an impressive uptime of around 99.982% with only 1.6 hours of downtime per year. The segment's prominence is particularly evident in major cities like Dubai, which leads with about 21% of Tier 3 facilities, followed by Abu Dhabi at 16% and Jeddah at 14%. Large data centers currently constitute about 59% of the Tier 3 segment, with major operators like Khazna Data Center holding a market share of nearly 20%, followed by Etihad Etisalat Company and Etisalat with market shares of 19% and 9% respectively.

Tier 4 Segment in Middle East Data Center Market

The Tier 4 segment is projected to experience the most rapid growth in the Middle East data center market from 2024 to 2029, with an expected growth rate of approximately 27%. This remarkable growth trajectory is driven by the increasing demand for complete fault tolerance and redundancy across all components. Currently, there are 11 Tier 4-certified data centers operating across strategic locations including Riyadh, Dammam, Haifa, Tirat Carmel, Jerusalem, Rosh HaAyin, Tel Aviv, Central Israel, Abu Dhabi, Dubai, Tehran, and Manama. The segment's expansion is particularly strong in Dammam, which holds about 32% of Tier 4 facilities, followed by Riyadh at 15% and Haifa at 14%, reflecting the growing emphasis on high-reliability data center infrastructure in these regions.

Remaining Segments in Tier Type

The Tier 1 and 2 segment represents the basic level of data center infrastructure in the Middle East market. These facilities primarily serve small businesses requiring basic data storage and processing capabilities with relatively affordable pricing structures. While this segment maintains a presence in key locations such as Riyadh, Al Qassim, Dammam, Dubai, Tehran, and Muscat, it is experiencing a gradual decline as businesses increasingly opt for higher-tier facilities that offer enhanced data security protocols and advanced infrastructure services. The segment's role remains relevant for organizations with minimal computing requirements and budget constraints, though its market influence continues to diminish in favor of more advanced tier classifications.

Segment Analysis: Absorption

Utilized Segment in Middle East Data Center Market

The Utilized segment dominates the Middle East data center market, accounting for approximately 81% of the total IT load capacity in 2024. This significant market share is driven by the increasing adoption of cloud services, growing telecommunications infrastructure, and rising demand from various end-user industries including BFSI, e-commerce, and government sectors. The segment's dominance is further strengthened by the rapid digital transformation initiatives across the region, particularly in countries like the UAE and Saudi Arabia, where government-led programs are accelerating the adoption of digital services. The utilized capacity is primarily concentrated in Tier 3 and Tier 4 data centers, reflecting the region's focus on high-quality infrastructure development and reliable service delivery.

Non-Utilized Segment in Middle East Data Center Market

The Non-Utilized segment in the Middle East data center market is projected to grow at approximately 12% CAGR from 2024 to 2029. This growth is primarily driven by the increasing investments in new data center facilities across the region, particularly in emerging markets and developing cities. The expansion is supported by various factors including the establishment of new business hubs, increasing foreign investments, and the growing need for backup and redundancy capacity. The segment's growth is also influenced by the strategic planning of data center operators who maintain reserve capacity to accommodate future expansion needs and ensure operational flexibility in response to sudden demand surges.

Middle East Data Center Market Geography Segment Analysis

Middle East Data Center Market in United Arab Emirates

The United Arab Emirates stands as the dominant force in the UAE data center market, commanding approximately 42% of the total market share in 2024. The country's leadership position is strengthened by its well-established fiber broadband network and strategic initiatives focused on developing a robust digital economy. The UAE's commitment to technological advancement is evident through its comprehensive smart city initiatives and favorable policies for data center investments. The ease of obtaining construction permits and a progressive regulatory framework have made it an attractive destination for both regional and international data center operators. The country's strategic geographical location, coupled with its advanced telecommunications infrastructure, positions it as a crucial digital hub connecting Europe, Asia, and Africa. The UAE's focus on sustainable data center development is particularly noteworthy, with several facilities incorporating renewable energy solutions and innovative cooling technologies to reduce environmental impact. The government's proactive approach in developing digital infrastructure and supporting emerging technologies like artificial intelligence and cloud computing continues to drive the expansion of data center capabilities across major cities like Dubai and Abu Dhabi.

Middle East Data Center Market in Saudi Arabia

Saudi Arabia is experiencing remarkable growth in its Saudi Arabia data center market, with projections indicating an impressive growth rate of approximately 18% from 2024 to 2029. The Kingdom's digital transformation journey is closely aligned with its Vision 2030 objectives, which aim to establish the country as a leading digital hub in the region. The government's substantial investment in digital infrastructure development has created fertile ground for data center expansion. The implementation of advanced technologies and the growing adoption of cloud services are driving significant demand for data center services across the Kingdom. Saudi Arabia's strategic focus on developing smart cities and implementing cutting-edge digital solutions has attracted major global technology players to establish their presence in the market. The country's commitment to sustainable development is reflected in its initiatives to power data centers through renewable energy sources. The government's proactive approach in providing preferential power rates and tax incentives for cloud computing providers has further strengthened the market's growth potential. The Kingdom's emphasis on localizing technology services and developing digital capabilities has created a robust ecosystem for data center operations.

Middle East Data Center Market in Israel

Israel's data center market is characterized by its advanced technological infrastructure and strong focus on innovation. The country's position as a global tech hub has attracted significant investments in data center infrastructure, particularly from multinational corporations seeking to establish their presence in the region. Israel's robust startup ecosystem and leadership in quantum computing initiatives have created substantial demand for advanced data center services. The government's commitment to expanding fiber optic infrastructure and improving internet connectivity has strengthened the foundation for data center operations. The country's emphasis on cybersecurity and data protection has led to the development of highly secure and sophisticated data center facilities. Israel's strategic location and advanced technological capabilities have made it an attractive destination for companies requiring high-performance computing and data processing capabilities. The market benefits from a highly skilled workforce and a strong culture of technological innovation, which continues to drive advancements in data center operations and management.

Middle East Data Center Market in Other Countries

The GCC data center market in other Middle Eastern countries, including Qatar, Oman, Iran, Bahrain, and Jordan, demonstrates varying levels of development and potential. These markets are characterized by their unique approaches to digital transformation and infrastructure development. Qatar's emergence as a popular cloud hub has attracted global hyperscalers, while Bahrain's early adoption of cloud services has positioned it as a pioneer in the region. Oman's focus on ICT development aligns with its long-term diversification plans, creating opportunities for data center expansion. The growing emphasis on digital government services and smart city initiatives across these countries continues to drive demand for data center services. These markets benefit from increasing regional connectivity and the growing adoption of digital services across various sectors. The development of regulatory frameworks and investment in digital infrastructure across these countries reflects the region's commitment to establishing robust digital economies. The varying stages of market maturity in these countries present unique opportunities for data center operators and service providers.