Middle East’s AI and data centre surge spotlighted at Datacloud market address

Tahir Gok, MENA lead – DC Hawk, led the state of the market address at Datacloud Middle East. Gok delved into why the Middle East is entering a transformative era in digital infrastructure, where data centres are no longer just supporting cloud operations – they are becoming a strategic pillar for technological leadership and economic growth.

Coal powered the first wave of industrialisation, and oil powered the global economy for the last century, Gok noted, but today “the critical resource is computing power. AI doesn’t run in the cloud. It runs in physical infrastructure, land, power, cooling and data centres, which means digital leadership is now infrastructure leadership, and this is exactly where the Middle East has an advantage across the region.”

Structural drivers fuelling growth

The address covered four converging drivers that are enabling the region’s rapid expansion. These include abundant and competitively priced energy, governments capable of executing projects quickly at a national scale, sovereign capital ready to invest ahead of demand, and strategic planning of land and infrastructure.

“So while many global markets are constrained by power or permitting, this region is building capacity at campus scale, not megawatts, gigawatts, from Saudi Arabia to the UAE, Emirates to Bahrain and Oman,” Gok explained. “This approach has led to the emergence of what he described as a ‘new computer corridor’, purpose-built for hyperscale cloud and AI.”

The scale of this build-out is significant. Across the region, roughly 1.1 gigawatts of commissioned capacity exists, with 760 megawatts under construction and more than 5.5 gigawatts in the near-term pipeline.

“There are projects where land, power and operators are already identified,” he said. “So this reflects what we consider executable supply capacity that can realistically come online in the short to medium term.”

The address also focused on the rise of dedicated hyperscale self-grid capacity, which, while still smaller today, is growing steadily as cloud and AI demand localises. Beyond that, sovereign AI initiatives, such as the UAE’s Stargate and G42, are planning multi-gigawatt campuses specifically designed for AI workloads.

Saudi Arabia is similarly forming joint ventures with hyperscalers to deliver comparable scale across Riyadh and the Eastern Province. “The market isn’t growing incrementally anymore,” Gok said. “It’s through campus-level AI infrastructure.”

Shifting geographic dynamics

Geographically, the UAE remains the largest single market, representing just over half of live commissioned capacity. Saudi Arabia is the second largest, with other Gulf states providing additional regional scale. Historically, the UAE has been the primary entry point for hyperscalers and enterprise cloud in the region, but the growth story is shifting.

“If you look at what’s under construction, the Kingdom of Saudi Arabia becomes a dominant contributor, accounting for the majority of near-term capacity coming online,” Gok observed. The pipeline shows further diversification, with the UAE, Qatar, Kuwait, Turkey and other Gulf markets contributing to the medium-term expansion.

The geographic spread reduces concentration risk and supports the emergence of a true hyperscale corridor, rather than a single-city market. “The UAE established the base. The Kingdom of Saudi Arabia is driving the expansion, and the broader GCC is becoming the long-term pipeline,” Gok noted.

Real-time demand and absorption

Demand fundamentals in the region are strong and measurable. The current operating market comprises just over one gigawatt of live colocation capacity, with roughly 260 megawatts absorbed over the past year. Vacancy remains low at 6% to 7%, indicating that most new capacity is either pre-committed or filling quickly.

“So when you combine steady absorption, tight vacancy and high pre-leasing, the signal is clear. The region isn’t just building capacity, it’s being absorbed in real time,” Gok stated.

Pre-leasing is also a key feature of the Middle East’s growth trajectory. Nearly two-thirds of the near-term pipeline is already committed before delivery, reducing execution risk for operators and giving investors strong visibility on cash flows. “This is structural demand driven by hyperscale cloud, AI and enterprise localisation, non-temporary or cyclical growth,” he continued.

Operator Concentration and Market Structure

More than 80% of today’s live capacity sits in the UAE and Saudi Arabia and is delivered by a handful of experienced operators. In the UAE, Fasna and Gulf Tehran anchor the market with campus-scale operations, while in Saudi Arabia smaller commissioned capacity is offset by a strong pipeline led by the likes of Datavault and Humai.

“Structurally, the region isn’t fragmented. It’s concentrated in a few experienced operators capable of delivering large, reputable campuses, and for hyperscalers and investors that concentration reduces execution risk and speeds up deployment,” Gok said.

The address revealed that winning operators are those able to maintain continuously replenished pipelines, diversify energy sourcing, and ensure transparent delivery timelines. “Execution discipline matters more than speculative land banking,” he stated.

AI adoption driving localised infrastructure

AI adoption in the Middle East is both rapid and tangible. The UAE ranks first globally in AI diffusion at 64%, reflecting strong enterprise usage and active government programmes. Qatar and Saudi Arabia are accelerating adoption at 38%and 26% respectively. “Government, enterprise and cloud initiatives are deploying real AI infrastructure – high-density racks, liquid cooling, GPU-first campuses and sovereign AI mandates that require local computing,” the speaker noted.

This demand is inherently power-intensive and increasingly localised. Every percentage point of AI adoption translates directly into megawatts of new infrastructure demand. The address emphasised that the Middle East’s capacity expansion is therefore not speculative; it reflects real, structural demand driven by the localisation of AI workloads.

Power and the next cycle

Globally, AI demand has exposed structural constraints, with power becoming the primary bottleneck. Development timelines are extended, and operators increasingly act as intermediaries between hyperscalers and utilities.

“Access to energy will dictate where growth occurs,” Gok stated. Power strategy is now moving upstream geographically, with dispersion and higher densities demanding new cooling approaches. “The industry is moving from where we want to build to where we can actually power, actual power and deliver,” he said.

Operators who can reliably deliver capacity, diversify energy sources, and maintain continuous pipelines will dominate the next cycle. “Winning operators will maintain continuously replenished pipelines because large hyperscale deals can consume the use of supply overnight,” he explained. Transparency, execution discipline, and the ability to deliver announced payloads have become the key differentiators.

Lessons from North America

Benchmarking against North America provides insight into the potential trajectory of the Middle East market. North America has historically led most technology cycles by 12 to 24 months, and data centres are no exception. In 2024, roughly 6.6–6.7 gigawatts of capacity were released, rising to 15 gigawatts by the end of 2025. While the Middle East’s current scale is smaller, the North American experience demonstrates that demand regionalises rather than slows, providing a roadmap for future expansion.

The address concluded with a strategic question: “Are we positioned to capture the next wave here in the Middle East?” Given the combination of sovereign investment, competitive energy, experienced operators, and real-time AI-driven demand, the answer appears to be yes.