Saudi Arabia Data Centre market to surpass investment of $2 Billion by 2028

The Region is witnessing major cloud investments from Microsoft, Google, Alibaba, Oracle, & Huawei – Arizton. 

Datacenter investments in Saudi Arabia over the next 2-3 years are expected to be aggressive due to investments from local operators and the entry of several new operators. The market is attracting hyperscale operators to open their cloud regions in the country. The wholesale colocation revenue will likely increase in Saudi Arabia due to the entry of major cloud operators such as Microsoft, Google, Alibaba, Oracle, and Huawei. These companies have announced plans to open cloud regions in Saudi Arabia in the upcoming years. 

Investment opportunities in Saudi Arabia

• Saudi Arabia, one of the largest ICT markets in the Middle East region in terms of capital volume and spending, is a developed data center market in the Middle East region.
• In 2022, Dammam, Riyadh, and Jeddah were the major data center investment destinations in Saudi Arabia. Other cities such as Neom, Qassim, Al Khobar, and others also witness data center investments.
• The rising adoption of cloud-based services is helping the growth of retail and wholesale colocation services in the market. The market is witnessing increased demand for colocation spaces across existing and upcoming data centers.
• In September 2022, the company announced that it had secured full funding from Natixis Corporate & Investment Banking for its first data center that is under development in Dammam. The facility was expected to be online by Q4 2022. However, as of February 2023, the facility is yet to open.

Over 60 percent of future demand to come from cloud service providers
Saudi Arabia’s data center market has the presence of on-premise data centers operated by financial services, educational institutions, and governments, such as the National Commercial Bank, National Center for Security Operations, Qassim University Medical City, Saudi Credit Bureau, Saudi National Bank, and others. In the next 3-5 years, we will see a significant decline in on-premise owing to the increase in digitalizing initiatives across sectors, the implementation of a cloud-first strategy, and the demand for colocation and cloud. In addition, most existing service providers offer managed solutions to enterprise customers, which will likely grow in the market from 2023 to 2028.

The market is witnessing the entry of all the global cloud operators such as Google, Microsoft, Alibaba, Huawei, and Oracle. This will increase the demand for wholesale colocation services. Through continuous expansion by these service providers, the cloud segments will likely dominate the capacity over the next five years. Amazon Web Services (AWS) will also likely enter the market in 1-2 years. In addition, we believe the market will witness the entry of multiple global organizations to service customers through a local presence.