UAE data centre market poised for strong growth

Sector expected to create thousands of new jobs

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A view of the Khazna Data Centers office. — Supplied photo

Published: Thu 12 Sep 2024, 5:30 PM

The UAE data centre market size is estimated at 429.34 MW this year, and is expected to reach 841.03 MW by 2029, growing at a CAGR of 14.39 per cent between 2024 and 2029, research suggests.

“Due to the staggering amounts of data generated around the clock, the UAE will see more investments in data centre infrastructure as businesses are increasingly aware of the need to manage data and information efficiently and cost-effectively,” Johan Nilerud, senior director strategy and planning at Khazna Data Centers, told Khaleej Times in an interview .

Data centres have become one of the world’s most valuable resources as they enable e-commerce, cloud computing, and remote work, and also drive the global economy. Data centres are the backbone of the digital economy, enabling everything from cloud computing and artificial intelligence to the operation of smart cities and enterprise applications. They provide the essential infrastructure that supports data storage, processing, and distribution, ensuring that businesses can operate efficiently and securely.

Johan Nilerud, senior director strategy and planning at Khazna Data Centers

The outlook for data centre growth in the UAE is exceptionally promising, Nilerud said. “The region is experiencing a robust expansion in digital infrastructure, driven by initiatives such as smart cities projects, increasing enterprise demand, and the development of new subsea cable hubs that enhance connectivity. At Khazna, we are actively contributing to this growth through our ambitious expansion plans. At present, Khazna has a robust portfolio of advanced data centres across the UAE, with over 23 operational data centres, an additional 7 under construction, and several new projects in the pipeline across the UAE and MENA region,” he added.

Globally, the data centre industry is witnessing fast expansion. The global data centre market size, measured in total revenue worth $324 billion today, is projected to grow at a CAGR of 5.8 per cent, reaching $436 billion by 2028. According to Khazna’s latest white paper produced in partnership with WhiteShield, the global colocation data centre market is forecasted to experience even higher growth, with a 5-year CAGR of 11.3 per cent from 2021 to 2026.

In the context of the UAE, data centres like those operated by Khazna, facilitate the deployment of cutting-edge technologies, enhance connectivity, and provide the necessary resilience and reliability that modern businesses demand. “We are fortunate that the UAE Government strongly supports positioning the country as a global datacentre hub – this is evident in their proactive stance towards creating a favourable regulatory environment and investing in robust digital infrastructure. While private sector investment is significant, government support is essential to achieve the scale required for building and expanding datacentre infrastructure. In addition, the UAE government had laid out its digital ambitions for its 2025 strategy and was the first government to appoint a minister of AI, further cementing the importance of digital and the inability to progress without the data centres providing the foundation,” Nilerud said.

As data centres expand, they attract significant investments, both from local and international entities, which in turn stimulates economic activity. This growth supports the creation of high-skilled jobs in areas such as IT, engineering, and project management. For the UAE, according to a recent whitepaper by Khazna, data centre investment led to the creation of 1,605 jobs in 2023. In 2028, the number is predicted to grow, with the number of direct jobs created being 2,060 in the UAE. However, it is important to note that the major benefits on the job-market will be from the indirect and cross-sectoral jobs created as an effect of data centre infrastructure. Ongoing investments in data centres in UAE result in generating employment, fueling economic growth and digital transformation.

The presence of advanced data centres enhances the UAE’s attractiveness as a business hub, encouraging multinational corporations to establish regional headquarters in the country. “This influx of businesses drives further economic diversification, reducing reliance on traditional sectors like oil and gas. Additionally, data centres also support cutting-edge technologies such as AI, big data analytics, the Internet of Things (IoT), and blockchain. These innovations are not only essential for driving economic competitiveness and fostering technological advancement but also contribute to increased productivity and innovation across various industries,” Nilerud said.