The Kingdom of Saudi Arabia (KSA) has ambitious digital transformation plans and has been working hard to attract investments and create necessary infrastructure to achieve its goals. These efforts are now bearing fruit. A recent report by ResearchandMarkets.com, a globally renowned research agency, has revealed that the region’s data center market could double in size over the next four years.
In a statement released while launching the report titled Saudi Arabia Data Center Market Competition Forecast and Opportunities 2028, ResearchandMarkets.com (R&M) said, “The Saudi Arabia Data Center market is anticipated to grow at a rapid pace in the forecast period, 2024-2028,” adding, “The growing adoption of cloud, big data, and IoT (Internet of Things) technology services, together with government assistance, have all contributed to the rise of the Saudi Arabian data center market.”
R&M had valued the Saudi DC market size at US$ 1.02 Billion in 2022. It now projects that the market could grow to US$ 2.17 Billion by 2028 at a Compounded Average Growth Rate (CAGR) of 13.5 percent.
R&M explained the factors it foresees driving this boom, saying, “Growing preference and demand for computer and storage capacity among businesses is also boosting the market growth. The IoT industry will expand faster due to the fast 5G rollout in KSA and the ongoing digital transformation, leading to a surge in latency-sensitive use cases needing local computing capabilities.” It further said, “Saudi Arabia offers strong fiber connectivity across the Middle East and is connected to several parts of the world, hence creating demand for data centers in the country.”
These findings are in line with those of other global research firms as well. Recently, Knight Frank’s Data Centres – The MENA Report had also acknowledged KSA’s potential and found it to be the fastest growing Data Center market in the Middle East. It found that the IT capacity in Saudi Arabia has surged by 29.7% to 109MW since the beginning of the year. Global players are also betting big on KSA. In February, Microsoft had announced plans to invest in a new Cloud Data Center region in KSA, and in November, Google launched a Saudi Cloud Region.
W.Media also recognizes Saudi Arabia’s vast potential and is holding its maiden edition of Saudi Cloud and Data Center Convention in Riyadh on December 19, 2023. For more details click the image below:
The R&M report also points to other interconnected elements of growth such as the intertwined fates of 5G and Edge data centers. The M&R statement explained, “Edge computing is becoming more popular in the market as a result of the rising use of connected devices among consumers and organizations. In many Tier II and Tier III cities as well as in rural areas, this has resulted in a significant demand for higher-bandwidth internet, necessitating the construction of data centers to process information on par with big cities’ data requirements. Edge data centers have developed a decentralized data center architecture in which numerous edge data centers are linked to a single hyperscale facility. Over 50 Saudi Arabian cities have 5G coverage as of February 2021.”
The report also touches upon KSA’s green energy initiatives saying, “Many data center service providers have invested in clean, renewable energy sources to run their existing and future facilities as a result of the rising data center power usage and the desire to reduce carbon footprint.” It further says, “The King Salman Renewable Energy Initiative and Vision 2030 both call for the National Renewable Energy Program (NREP) to be implemented in order to fully utilize the country’s potential for renewable energy. Over the next ten years, Saudi Arabia is anticipated to receive an investment of more than USD20 million for the production of renewable energy.”
