• The Middle East is more than a hub – infra needs to be built accordingly

Discussions of Middle Eastern connectivity often focus on geography: a bridge between east and west, a key hub between global markets, and so on and so forth.

According to panellists at Capacity Middle East, this is already a given. The huge investment in data centres, driven by AI, national digitisation plans and data sovereignty, and increased service usage across business and society, means that traffic originating and consumed within the region is becoming just as important as the traffic flowing through it.

In infrastructure terms, this shifts priorities. Development needs to include not just global transit projects, but also fibre interconnection to support DC clusters, and inter-regional cables to connect the region’s markets with each other.

Read more: The Middle East’s next phase: Turning AI ambition into global connectivity leadership

• Cable systems are no longer just subsea…

The job of a subsea cable often focuses on getting  to the landing station, with everything after that a separate issue.

But with reliance on the Red Sea route now a risk to be mitigated, the Middle East is seeing more combined subsea-terrestrial projects being planned, particularly with Iraq and potentially Syria now emerging as a viable route that avoids the chokepoint. According to panellists, this means more projects are being designed with the terrestrial leg as an integral part of the planning from the get-go.

• …but commercial coordination is the missing piece

However, according to what we heard on stage, combining sea and land routes is not just an engineering issue. Subsea and terrestrial projects often run on different economic models, and panellists raised the issue that a pure subsea route often has more attractive pricing than a hybrid route – especially if terrestrial routes pass over multiple regulatory regimes.

If hybrid routes are to truly compete with traditional subsea systems, commercial and regulatory coordination is vital.

Read more: Exploring new subsea cables through the Middle East: Resilience, routes and readiness

• Iraq is delivering on its potential

Iraq’s strategic position on the non-Suez land route between east and west has made it a market of potential for quite some time. Now, there are signs the country is realising the potential offered both by its location and its young (median age: 30) market of 45 million.

One reason for this is infrastructure development within the country. The Iraqi National Backbone, a state-owned, open-access network, has laid the groundwork for connectivity development across the country’s economy, and an Uptime Institute panellist reported more Iraqi data centres being built to international standards.

Pricing is an issue – wholesale pricing is above the regional average – but with political stability for a number of years, expect more success stories from Iraq at Capacity Middle East 2027.

Read more: Iraq’s digital backbone: from transit core to data centre destination

• Long-term planning is driving growth

As various countries are discovering to their cost, when a data centre project can be derailed by local authorities before a spade hits the ground, it is hard to develop AI-ready infrastructure.

In contrast, various Capacity Middle East panellists highlighted the joined-up, long-term planning behind digital infrastructure in the Middle East – and the difference it makes to customer acquisition, investment trust, and development timelines.

The state investment and development programmes of Saudi Arabia and the UAE are well-established, but a session handed the microphone to two more countries seeing the benefits of long-term planning – Oman and Jordan. Both countries are running national strategies focusing on different aspects of digital transformation – Oman on a Digital Triangle of three AI and cloud hubs, and Jordan around business parks making use of the country’s highly skilled graduate workforce.

Read more: Oman and Jordan race to lead Middle East’s AI and data centre revolution

• Data centres in the Middle East: strong fundamentals, healthy uptake

According to DC Hawk’s presentation at Datacloud Middle East, the Middle East’s data centre market has four strong fundamentals – cheap energy, available land, coherent national planning, and available sovereign capital.

But potential is one thing. Uptake is another, and the signs are good on that front. Vacancy rates are low across the region at 6-7%, and a quarter of a gigabyte of colocation capacity was absorbed in the last year – two-thirds of which was pre-committed before completion.

Although 80% of existing capacity is concentrated in the UAE and Saudi Arabia, other regional markets are actively building capacity and competing for operators, suggesting significant headroom for growth.

• The Middle East is attracting capital, not just deploying it

Middle Eastern sovereign funds have traditionally been sources of investment around the world. Now, capital flows are moving the other way too, with weighty investment coming into the region’s digital infrastructure projects from elsewhere.

This explains the presence of KKR on an investment-focused panel at Capacity Middle East – the company has closed five transactions in the region over the past year, notably a hefty investment in Gulf Data Hub, with considerable investments from hyperscalers and data centre operators too.

Speaking on the panel, KKR’s managing director talked about the need for international investors to offer some kind of advantage. This is vital when operating in the same market as the region’s various gargantuan sovereign wealth funds and national strategy investment budgets.

Read more: Investment momentum builds as the Middle East sharpens its digital infrastructure edge

• AI buildout: don’t forget about interconnection

AI buildout is focusing on the actual facilities and trunk subsea links, but it doesn’t stop there.

As panellists discussing the role of interconnection in the Middle East’s digital transformation covered, it is vital to also deliver a local peering ecosystem, IXPs to be technically ready, and fibre interconnection between data centres – in short, unified digital infrastructure. Not only does this improve the effectiveness of the data centres being built, it also fuels the accelerating data localisation and digital transformation in the region in general – having the infrastructure to not have to send traffic to Europe or Asia and back means regional traffic can be kept regional.

A big part of this lies with the region’s governments and communications authorities, who according to panellists have an important role in establishing carrier-neutral internet exchanges and easier network entry.

“Cloud, edge compute and AI won’t go into a data centre that’s not highly interconnected,” said one speaker.  “If you take out the interconnect layer, you decouple what makes everything else work”.

•  AI isn’t the only source of traffic growth

Related to the interconnectivity angle, a panel on ensuring connection to key data centre hubs raised an important point – the market can’t take its eye off the ball regarding other sources of traffic.

As Equinix’s Brendan Rawle put it: “It’s understandable when we talk about network trends and bandwidth trends that people pivot toward AI. I completely understand that. But as a data centre operator, if you look at bandwidth right now, the main driver of internet bandwidth is still consumer internet traffic: streaming, gaming, video platforms.”

With growing enterprise and DC-to-DC traffic added to the mix (up to 100% and 300% respectively, according to data cited onstage), it is not just AI that requires infra buildout in the Middle East.

• AI density is forcing data centre design to become adaptive, not predictive

Finally, panellists at Datacloud Middle East 2026 highlighted the growing disconnection between how data centres are designed and how quickly AI workloads are evolving. While many facilities still operate comfortably at 10–20kW per rack, AI training environments are already pushing beyond 100kW, with some projections suggesting far higher densities could emerge within just a few years.

This acceleration is forcing developers to make multi‑billion‑dollar infrastructure decisions with limited visibility into future customer requirements. With design, construction and commissioning timelines stretching to 18 to 24 months, facilities risk being technologically misaligned almost as soon as they come online. As one panellist noted, predictability has become the industry’s scarcest resource, driving pressure to shorten build cycles and make faster design choices.

Rather than optimising for a single future state, panellists argued that competitiveness in the AI era will depend on hybrid, flexible designs – facilities capable of supporting today’s workloads while remaining adaptable as density, cooling and power requirements continue to evolve.

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