The surge in AI, particularly generative AI, is fueling unprecedented demand for data center capacity around the world. Major technology firms like Microsoft and Amazon are investing heavily in AI infrastructure, with combined capital expenditure expected to reach $155 billion in 2025. However, the availability of power has become a critical bottleneck for data center growth, and global shortages are pushing operators to seek new build sites with reliable, sustainable energy supplies. In Europe, for instance, demand outpaced supply in 2024, with vacancy rates dropping below 10% and a projected 20% market growth in 2025. Added to this, geopolitical shifts continue to influence regional strategies.
With the requirements of AI workloads still evolving at pace, providers must now consider data center location and design carefully if they are to successfully future-proof their facilities in this rapidly changing industry.
Scaling Technology Infrastructure
So, where can operators look for favorable expansion conditions? In recent years, the Middle East and North African (MENA) region has emerged as an attractive data center hub, with the UAE and Saudi Arabia leading the charge in digital transformation.
The UAEâs modern, scalable power grid is a key differentiator compared to the legacy systems in Europe, and its energy deployment is also significantly faster. The countryâs geographic position also allows it to act as a data bridge between Europe, Asia, and Africa, while ample land and faster permitting and approval processes around large infrastructure builds make scaling more feasible.
Determining the viability of investing in data center infrastructure is an art as much as a science and includes many variables. However, People, Power, Connectivity, and Capital, or âthe 2Ps and the 2Csâ, are four of the most critical components in todayâs dynamic landscape.
While power and abundant investment capital are readily available in the MENA region, it is not immune to the global challenges around acquiring skilled talent. Some countries are doing a great job of addressing this. In the UAE, for instance, a lot of effort has been put into attracting top global talent across every sector. Saudi Arabia is taking a similar approach.
Still, the availability of industry experiences managing larger infrastructure projects across the wider region is limited, meaning that project execution across an increasing pool of projects has the potential to be slower.
Meanwhile, low-latency and scalable connectivity is abundant with subsea cables in operations and in deployment, and most countries, particularly in the Gulf Cooperation Council (GCC), have strong domestic fixed and mobile networks. However, interconnectivity and cost-effective cross-border connectivity need to improve for optimal pan-regional and global data movement.
Regulation is another key consideration. Having access to clear and transparent national frameworks around data privacy and sovereignty is vital before committing large capital investments in new markets, as these can differ substantially around the world. The MENA region has regulatory conditions that make it somewhat easier to build and operate a data center than in other places.
A Reciprocal Relationship
With the AI boom putting increasing regulatory scrutiny on the data center industry and power demands now much higher than even a few years ago, data center operators would do well to demonstrate their wider societal benefits and value to the places where they are looking to establish themselves. This could include job creation, tax dollars, or even the ability to give unused power back to the grid.
To give an example, Khazna recently announced plans to expand into TĂŒrkiye, with the construction of an AI-enabled data center with the potential to scale to 100 MW. We believe this new arrival will create economic growth and investment for the country by strengthening its digital infrastructure and positioning Ankara as a strategic location for hosting data-intensive services.
Beyond creating jobs directly and indirectly, it will also encourage innovation and accelerate digital transformation, creating a win-win for both the company and the country.
Experience Is Paramount
Global data center demand is expected to increase by six to eight times in the next five years. New market entrants â even those backed by real estate companies â are now wading in to capitalize on this rapidly growing industry. While this building frenzy is positive, many underestimate the operational expertise required to successfully build and run a data center.
Still, the fact that so many players are trying to meet such unprecedented demand suggests something about the MENA region, particularly the UAE. It may be one of the few markets capable of meeting global data center demand in the years ahead, thanks to its quick deployment timelines, stable power infrastructure and geographic positioning for global connectivity.
This presents a golden opportunity for investors, technology partners, and hyperscalers to prioritize it as a global data infrastructure hub.
