Market Trends of Middle East Data Center Rack Industry
BFSI is expected to witness the highest growth
- The most significant market shares among end-user industries are projected to come from the cloud, telecom, e-commerce, and BFSI end users. As a result, the banking, financial services, and insurance (BFSI) sector, one of the key pillars of the region's economy, increased projects focusing on Industry 4.0.
- The region is witnessing several digital transformations, advancing the cloud industry. These initiatives, as well as similar others, are being carried out by the United Arab Emirates, Saudi Arabia, Israel, and the Rest of the Middle East.
- Advanced manufacturing value chains that utilize cutting-edge technologies to increase manufacturing and production, including robotics, artificial intelligence, augmented reality, 3D printing, and the Internet of Things.
- The telecom sector is expected to continue to rule due to the rising adoption of 5G networks. The expected 5G mobile data speed increase by 2029 is enormous, reaching 921 Mbps, thus boosting the demand for data center servers. The nation's deployment of 4G also creates a need for data centers.
- Moreover, the number of Internet subscribers in UAE increased drastically, reaching 3,740 thousand subscribers in June 2022. The growing demand is expected to increase the demand for servers in the market.
- The demand will likely increase during the forecast period due to the quick installation and growth of IT infrastructure. Israel was one of the eight Middle East and North Africa (MENA) nations to introduce commercial 5G by the end of March 2022. The country's telecom sector would expand due to the industry-wide demand for low latency rates. The need for data centers to provide a platform would increase as 5G gets popularity among the general public, easing the system requirements for the same.
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Saudi Arabia is the largest Country
- In the coming years, the Middle East region is expected to increase its investment in the data center market. Several factors are facilitating the expansion of data centers in the area.
- The region's governments' smart city ambitions are driving a shift in how modern communities are built. Cities of the future, supported by digital technologies, are expected to generate massive amounts of data. It is critical to optimize data capture, storage, and processing.
- Domestic data growth and the emergence of 5G networks drive demand for localized data centers to speed up data transfer. Uncertain data sovereignty regulations in certain jurisdictions, including the Gulf Cooperation Council (GCC), drive data center investments. This emphasizes the importance of organizations such as banks retaining customer data within the country.
- The United Arab Emirates has been a prime location for data centers in the region as one of the frontrunners in the race to establish a robust and competitive digital economy. According to Arcadis' Data Centre Location Index, the UAE's "well-established fiber broadband network" helped the country secure the top spot for mobile broadband penetration.
- At the same time, the ease of obtaining construction permits and new smart city initiatives make it an emerging location for data center investment.
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