Market Trends of UAE Data Center Construction Industry
The IT and Telcom Segment is Expected to Gain Significant Share in the Market
- The data center industry has begun to gain drive with attractive investments from the IT sector. Medium-term growth in IT spending is driven by increased demand for software and services, particularly from large enterprises looking for solutions in the areas of cloud computing, data analytics, cybersecurity, and IoT.
- In July 2024, Emirates Integrated Telecommunications Company (EITC)'s Du unveiled a strategic alliance with Amazon Web Services (AWS) at the Mobile World Congress (MWC) in Barcelona. The primary goal of this partnership is to accelerate cloud adoption among UAE enterprises and government bodies. Du and AWS are establishing a Cloud Center of Excellence (CCoE). This center will focus on crafting industry-leading practices, protocols, and oversight frameworks. These initiatives are designed to empower Du to offer cutting-edge cloud solutions to its clientele.
- In terms of connectivity, robust high-speed internet and well-established telecom infrastructure, coupled with advancements by key telecom players, are bolstering the expansion of data centers in the country. In February 2024, at MWC Barcelona, Huawei, a Chinese vendor, and the Emirati telecom, Du, signed a Memorandum of Understanding (MoU) to enhance 5G-Advanced (5G-A) technology in the UAE. Termed "5G-A Country," the initiative aims to expedite the UAE's digital evolution.
- In December 2023, Nokia and Du, a part of Emirates Integrated Telecommunications Company (EITC), marked a milestone by completing the UAE's inaugural 5G-Advanced RedCap trial over a live commercial network. This trial underscored the readiness of Du's 5G infrastructure and highlighted its potential for pioneering applications in IoT, wearables, and Industry 4.0, which is crucial for overcoming 5G monetization hurdles.
- Such instances in the market create more need for data in the coming years, and this surge in data storage demand is poised to elevate the need for data centers in the region, thereby bolstering the prospects of data center construction firms during the study period.
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The Tier 3 Segment is Expected to Hold a Major Share in the Market
- In 2023, there were around 37 data centers in UAE with Tier 3 certification, with a cumulative IT load capacity of 251.5 MW. Reliability and affordability are the major factors driving the demand for tier 3 data centers in the country. The tier 3 segment is projected to register a CAGR of 11.04% to reach around 635.9 MW by 2030.
- In 2023, Dubai emerged as a frontrunner in Tier 3 certified data centers, spearheaded by Khazna Data Center, which commanded an impressive IT load capacity of 107.9 MW spread across 14 facilities. Following closely, Etisalat boasted 44.3 MW, spanning six facilities. Gulf Data Hub operated four facilities with a 38.2 MW IT load. Equinix Inc. oversaw 12.69 MW distributed among three facilities, while the remaining market players held smaller shares.
- During the study period, Abu Dhabi is slated to construct approximately 15 data center facilities, each meticulously designed to meet Tier 3 standards. These strategic facilities are projected to collectively contribute more than 140 MW of IT load capacity to the region. Dubai is also anticipated to introduce two facilities with a combined capacity exceeding 150 MW.
- During the study period, key players are planning to invest in data centers, including Khazna Data Center, Moro Hub (Moro Hub and Huawei), and Gulf Data Hub. These developments in the UAE market are poised to amplify the demand for Tier 3-certified data centers. This heightened demand, particularly within the Tier 3 category, is expected to fuel the necessity for data center construction services in the coming years.
