GCC Colocation Market to Grow by End of 2025

The colocation market in the six Gulf Cooperation Council (GCC) data centers in the Middle East is forecasted to grow 2.2 times by 2025, from 383 MW of IT load to an estimated 839 MW of IT load, demonstrating the large investment that is going into this sector.

The insights offered by Agility Global showed that Saudi Arabia, the largest economy in the region, has been witnessing a lot of growth in data center activity thanks to the government’s continued to support for the growth of the data centers.

In fact, Saudi Arabia’s Ministry of Communications and Information Technology (MCIT) has called for an $18 billion investment in hyperscale data centers and renewable energy by 2030 to take total capacity to more than 1.3 GW and transform Saudi Arabia into the main data center hub for the region.

With a population approaching 35 million, there is a large domestic demand which has been reinforced by recent data protection laws that place tight restrictions on the transfer of data outside of the country. Saudis are avid users of social media and consumers of online content. Notably, Saudi Arabia is becoming a global hub for e-sports and gaming.

Saudi Arabia has 16 in-service subsea cables, which places it as one of the highest amongst other GCC countries in terms of connectivity. The 2Africa cable, which will be the longest subsea cable ever developed and is expected to come into operation by the end of next year, has four cable landing points in Saudi Arabia.

Google’s Blue Raman cable, which will connect Europe to the Middle East and India without going through the Gulf of Suez, includes a future cable landing point in Duba on the Red Sea, Agility Global said.

Whilst Riyadh, Jeddah, and Dammam remain the three main clusters for data center development, the government is pushing ahead with the development of the $500 billion futuristic city NEOM. As an early deployment in the development of the city, NEOM is building a 12 MW data center facility, with Oracle announced as the first tenant.

UAE Leads GCC

Coming to the UAE, the Emirates has led the GCC region in terms of data center capacity, variety of data center operators, and future growth ambition for many years. The market has remained attractive with its tech-hungry and growing population, as well as Dubai’s position as a major international business and trading hub.

The UAE has worked hard to improve its international and regional connectivity, now being served by 17 international subsea cables, whereas a decade ago, this number was significantly lower.

Multiple hyperscale cloud providers are now present, including AWS, Microsoft, Google, and Alibaba. AWS’s recent launch of their own data centers in the UAE reflects the country’s rapid uptake of cloud services, with most Government entities, large enterprises, and SMEs using cloud services already or are in advanced stages of actioning a migration plan.

Even the demand for data center requirements in Qatar received a big boost ahead of the 2022 FIFA World Cup, which saw massive investment into new infrastructure to support the global sporting event.

Until recently, the market in Qatar was limited to just two operators offering colocation services, namely Meeza and Ooredoo.

However, with the entry of cloud providers Microsoft and Google, the market has shifted into another phase of development, with a number of international operators now actively looking at Qatar for opportunities to offer build-to-suit facilities, which is opening up the market to potential new entrants.

Qatar was the first country in the world to launch 5G services back in 2018. It has the cheapest power costs for businesses in the GCC and has the highest per capita levels in the region.

Google Cloud in Kuwait

One year after announcing plans to bring a new Google Cloud region to Kuwait to support its growing customer base, Google Cloud opened its new offices in Kuwait licensed by Kuwait Direct Investment Promotion Authority (KDIPA) in July last year.

This expansion further signifies Google Cloud’s commitment to supporting Kuwait’s national digital transformation journey, including the modernisation of government services and the advancement of economic development.

Reputed telecom companies such as Zain, Ooredoo (formerly Fast Telco), Kalaam (formerly Zajil), and Solutions by STC (formerly Quality Net) have built additional colocation data center space alongside their own needs.

The majority of these facilities are built in their own headquarters occupying a couple of floors in each building. Smaller hosting businesses have taken space within the Tec Building tower, which is home to Kuwait’s cable landing station.

The Bahrain data center market also has managed to attract some major wins over the past few years and tech firms including AWS, Tencent, and the announcement of a major data center campus with STC proved that there is an enormous confidence in this market.

Oman has the highest number of subsea cables in the GCC with 14 currently in operation and a further four planned. Oman has set a target of 30% of all power to come from renewable sources by 2030 with a number of large-scale solar and wind projects in the pipeline.