Saudi Arabia is accelerating its digital transformation, aiming to become a dominant force in the data center industry. According to a new report by Jones Lang LaSalle Inc. (JLL), Riyadh is set to outpace other Middle Eastern cities in data center expansion over the next three years.
Riyadh’s Data Center Boom
JLL’s analysis predicts that Riyadh’s data center capacity will surge by an impressive 37% annually through 2027. This growth rate nearly doubles projections for Dubai and Abu Dhabi and significantly surpasses the global average of 15%.
Why Riyadh?
Saudi Arabia’s push for digital modernization is attracting substantial global investment. The country’s Vision 2030 strategy, which focuses on economic diversification and technological advancement, has made it a hotspot for international tech giants. Companies such as Microsoft, Amazon Web Services, and Equinix have already established a presence in the region.
Daniel Thorpe, head of EMEA data center research at JLL, pointed to several driving factors behind this expansion, including government incentives, AI-driven policies, and a rapidly evolving tech sector. “Saudi Arabia is on a mission to become an AI leader,” he stated. “Its investment in digital infrastructure underscores that ambition.”
Tech Giants and Startups Join the Surge
Major global corporations and emerging startups are capitalizing on Saudi Arabia’s digital transformation. Microsoft and Amazon Web Services are significantly expanding their cloud infrastructure in the kingdom, while US-based startup Groq Inc. has partnered with Saudi Aramco to develop an AI inferencing center.
To further attract investment, the Saudi government is offering tax incentives and establishing free zones. Data sovereignty regulations, ensuring sensitive information remains within national borders, are also enhancing security and control.
Saudi Arabia’s $100 Billion AI Initiative
The kingdom is reportedly planning an ambitious AI initiative with potential funding of up to $100 billion. This move aims to position Saudi Arabia as a rival to the UAE in AI and data center growth.
However, the country faces obstacles, including restrictions imposed by the US government on advanced AI chip exports. These limitations, which also impact the UAE, could pose a challenge to the region’s AI ambitions.
Saudi Arabia vs. UAE: The AI Race
The Middle East’s data center market is currently valued at approximately $6 billion, with the UAE leading in total capacity. However, Saudi Arabia is quickly closing the gap.
With a population of 35 million and a strong focus on AI, experts believe Saudi Arabia has the potential to surpass the UAE in the coming years. Stephen Macdonald, managing partner at Proptech Connection, a real estate and technology consultancy, noted the country’s strategic advantages. “Saudi Arabia has both the vision and financial resources to tackle challenges such as rising energy costs and infrastructure complexities,” he said. “With its commitment and investment, the kingdom is well on its way to leading the AI revolution.”