The shift towards a digital economy and the ambition to become a hub for artificial intelligence (AI) in Saudi Arabia is poised to catapult Riyadh to the forefront of the data center market in the Middle East over the next three years, according to Jones Lang LaSalle (JLL), a leading real estate services provider. As the kingdom’s capital, Riyadh is expected to experience a significant expansion of its data center footprint, with an annual growth rate of 37% until 2027, which is nearly double the predicted growth for neighboring cities Dubai and Abu Dhabi in the United Arab Emirates (UAE), and surpasses the global forecast of 15%.
This remarkable growth trajectory is being driven by the Saudi government’s serious push towards digital transformation and its aim to become a major player in the AI landscape. “We’re seeing a strong drive towards digital transformation and becoming an AI powerhouse,” notes Daniel Thorpe, Head of Data Center Research at JLL for the Europe, Middle East, and Africa (EMEA) region, in an interview with Bloomberg. “When you combine this with business-friendly government policies, the data center market is thriving.”
As reported by Bloomberg, Saudi Arabia is rapidly establishing cloud and data center infrastructure to propel its quest to become a hub for AI, technology, and innovation, a key component of its economic diversification plan. The demand for data centers is growing rapidly in tandem with the evolution of these industries, and this development is occurring alongside the establishment of new headquarters by hundreds of companies in Riyadh. Major players, including Microsoft, Amazon.com’s cloud division, and Equinix Inc, have signed agreements to build data center facilities in Saudi Arabia, while US startup Groq Inc has partnered with oil giant Aramco to create an AI center. Tax incentives, free economic zones, and efforts to promote data centers have all contributed to stimulating investment in the sector.
The Saudi government’s initiative to create a thriving digital economy is gaining momentum, with Riyadh emerging as a prime destination for data centers. As the city continues to attract significant investment and establish itself as a major player in the AI and technology landscape, it is likely to experience sustained growth in the data center market. With its business-friendly environment, strategic location, and supportive government policies, Riyadh is well-positioned to become a leading hub for data centers in the Middle East, catering to the growing demand for digital infrastructure in the region.
