Dubai, UAE – As demand for digital infrastructure continues to surge globally, experts are calling on Gulf nations to broaden their data centre offerings, not just in terms of quantity, but also value-added services and technological innovation. The region is witnessing record-level growth, but analysts warn that without addressing key gaps, the Gulf could risk falling behind in the race to dominate the next generation of cloud and AI-driven economies.
In 2024, the GCC’s data centre market was valued at an estimated $3.5 billion, with projections suggesting this figure could triple by the end of the decade, according to market observers. However, issues such as energy sustainability, limited early-stage financing, and a lack of localised R&D are emerging as critical concerns.
Energy Sustainability: Turning Oil into Compute Power
Data centres are energy-intensive facilities, accounting for about 1% of global electricity usage last year. While the Gulf is energy-rich, the push for sustainable operations is gaining momentum. Stakeholders are advocating for the integration of renewable energy sources into data centre infrastructure to align with global climate targets.
Bashar Kilani, managing director of Dubai-based AI360 Innovations, noted that the Gulf holds unique potential to turn its energy assets into economic advantage.
“Data centres are the low-hanging fruit. If we can convert oil into compute capacity and deliver it with better economic value, the Gulf becomes a global digital powerhouse,” Kilani said.
Financing Bottlenecks Threaten Growth
Despite the optimism, financing remains a key challenge. Developing large-scale data centres requires substantial capital investment, and early-stage funding remains limited. Industry experts warn that this bottleneck may slow the pace of expansion, leaving unmet demand for digital infrastructure across key Gulf markets.
In particular, while countries like the UAE host the largest number of data centres in MENA, many projects face delays due to difficulties in securing adequate funding.
Saudi Arabia’s Bold Plans and Regional Competition
Saudi Arabia, in response to this growing demand, has unveiled ambitious plans to quadruple its data centre capacity to over 1,000 megawatts in the next five years. This scale-up is part of the Kingdom’s broader digital transformation strategy, aligned with Vision 2030.
The move is expected to position Saudi Arabia as a regional leader in cloud computing and digital services, especially if it continues to attract global technology partners and investors.
A Call for Value-Added Services and Innovation
Experts stress that building data centres alone isn’t enough. For the Gulf to truly lead, the focus must shift towards developing value-added digital services, investing in local R&D, and fostering regional talent pipelines that can support innovation in AI, cybersecurity, and edge computing.
“Infrastructure is only one part of the equation. The Gulf must invest in intellectual capital to become a global innovation hub,” said a regional digital economy analyst.
Conclusion
As global data demands grow, the Gulf’s strategic location and energy reserves position it advantageously. However, to remain competitive and avoid over-reliance on infrastructure alone, the region must pivot towards sustainable practices, smarter investment models, and technology-driven innovation.
The message is clear: Build more, but build smarter.
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