Report Overview

A surging demand for low-latency data transfers by the thriving information and communications technology (ICT) companies, growing adoption of cloud computing and IoT technologies, and exponential growth of data generated by OTT platforms and social media intensifying the need for robust data center infrastructure are expected to drive UAE Data Center Market during the forecast period between 2026 and 2032

UAE Data Center Market – Industry Trends & Forecast Report, 2032

UAE Data Center Market size was estimated at USD 1.5 billion in 2025. During the forecast period between 2026 and 2032, UAE Data Center Market size is projected to grow at a CAGR of 12.86% reaching a value of USD 3.5 billion by 2032. Prominent drivers of UAE Data Center Market include the rapid expansion of the IT sector and the growing adoption of hybrid and multi-cloud solutions. The rising demand for automated systems and low-latency data transfers, fueled by increasing smart device penetration, further boosts the market. Additionally, the escalating data volumes from OTT platforms and social media have amplified the need for reliable data centers. Integration of Big Data, analytics, and smart technologies in oilfields by leading oil companies is significantly contributing to regional growth. The construction of green data centers using low-emission materials for sustainability and efficient waste recycling is another key growth factor. Furthermore, the adoption of innovative models like built-to-suit and pay-per-use, along with comprehensive cloud computing frameworks addressing data governance, is positively influencing the market. The migration from on-premise infrastructure to colocation and managed services, supported by government initiatives for digital transformation and 5G advancements, is expected to drive substantial growth over the forecast period.

Source: BlueWeave Consulting

Data Center – Overview

A data center is a centralized facility where organizations store, process, and manage physical and virtual data. It comprises servers, switches, power systems, networking, environmental controls, and security infrastructure. Ranging from small rooms to large complexes, data centers are vital for organizational IT operations, supporting critical systems and data distribution. Designed to handle massive data volumes and high traffic with minimal latency, they are essential for Big Data processing, Machine Learning, and Artificial Intelligence. Data centers find applications across industries, including manufacturing, transportation, retail, IT and telecommunications, BFSI, healthcare, energy, and government sectors.

UAE Data Center Market

Growth Drivers

Increasing Adoption of Cloud Computing and IoT Technologies

The growing adoption of Internet of Things (IoT) technologies and cloud computing is revolutionizing industries across the UAE. IoT-powered innovations such as connected cars, smart homes, and intelligent healthcare systems, coupled with 5G network deployment, are fostering seamless connectivity in sectors like manufacturing, logistics, energy, and transportation, boosting the demand for advanced data centers capable of managing vast data volumes. UAE holds the largest share of GCC Data Center Market and is expected to maintain dominance during the forecast period. It is driven by its strategic location, world-class infrastructure, and favorable government policies. Dubai has emerged as the central hub for data centers in the Middle East region, attracting global tech giants such as Amazon Web Services (AWS), Google, and Microsoft, who have established significant facilities. The UAE's commitment to technological advancement, backed by robust infrastructure development, has positioned the country as the preferred destination for data center operators. The UAE is home to numerous local and international players, including Khazna Data Centers, Moro Hub, and Equinix, which have contributed to the substantial growth of the market. As of 2022, the UAE's colocation data center capacity stood at 164 MW, with projections indicating it will reach USD 1.91 billion by 2028. The country's strategic investments in solar energy, such as the Moro Hub facility running on solar power, further enhance its reputation as a leader in sustainable data center operations. Moreover, the UAE government has created a favorable environment for growth, offering tax incentives, special economic zones, and infrastructure support. In addition, the growing adoption of cloud, AI, and IoT technologies, positions the UAE to meet the growing demand for data storage, security, and digital transformation in the region. While challenges like power consumption and skilled labor shortages remain, the UAE’s continued investments in digital infrastructure and talent development ensure that it will sustain its dominance in the GCC data center sector.

Challenges

Limited Availability of Skilled Data Center Professionals

As the demand for advanced data centers rises with increasing IoT adoption, 5G deployment, and cloud computing integration, the UAE faces a talent gap in managing, maintaining, and optimizing these facilities. The lack of expertise in critical areas such as data center design, network management, cybersecurity, and sustainable operations limits operational efficiency and scalability. The talent shortage could not only hamper timely project execution but also increase reliance on costly expatriate professionals, thereby restraining the overall growth potential of UAE Data Center Market.

Impact of Escalating Geopolitical Tensions on UAE Data Center Market

Escalating geopolitical tensions among countries and further spreading across the regions, especially in the Middle East, could significantly impact the growth of UAE Data Center Market, by disrupting supply chains, delaying infrastructure projects, and increasing operational risks. Tensions in the region can hinder the import of critical equipment, such as servers and networking components, leading to project delays and cost escalations. Additionally, uncertainties around cross-border data flow regulations and heightened cybersecurity risks could deter investments and slow market expansion. Geopolitical instability may also divert government priorities and funding away from digital infrastructure development. Despite these challenges, UAE Data Center Market could benefit from an increasing demand for localized data centers to ensure data sovereignty and mitigate external dependencies.

UAE Data Center Market

Segmental Coverage

UAE Data Center Market – By Component

UAE Data Center Market by component is divided into Hardware, Software, and Service segments. The hardware segment holds the largest market share of UAE Data Center Market by component. Hardware consists power systems for uninterrupted operations, cooling systems to combat regional heat, and essential elements like racks, servers, and networking devices. These components form the operational backbone of data centers. Software solutions, led by Data Centre Infrastructure Management (DCIM) systems, offer cloud-based and on-premises options to enhance management and scalability. Meanwhile, the services segment comprises professional services, integration, consulting, and managed services, ensuring efficient setup, maintenance, and optimization. Together, these components support the growing digital demands across industries in the UAE region.

Source: BlueWeave Consulting

UAE Data Center Market – By Type

Based on type, UAE Data Center Market is divided into Enterprise Data Centers, Colocation Data Centers, Edge Data Centers, and Hyperscale Data Centers segments. The colocation data centers segment accounts for the largest share of UAE Data Center Market by type, primarily due to a spurring demand from enterprises that prefer outsourcing their IT infrastructure for cost-efficiency, scalability, and aligning with their IT outsourcing strategies. Colocation services allow businesses to rent space for their servers and hardware in a data center facility, offering an efficient and secure way to manage operations without the complexities of owning and maintaining a private facility. Despite the growing prominence of public cloud services, colocation remains vital for certain sectors, especially those needing compliance with local data protection regulations, such as government, healthcare, and banking. Additionally, proximity to end-users for low-latency services, as well as reduced international bandwidth costs, further strengthens the demand for local colocation data centers in the region. The growing emphasis on privacy and data protection regulations, along with the high reliability and performance requirements, ensures that local colocation centers continue to play a crucial role in the region's data center market. This trend is expected to persist despite the increasing investments by global cloud service providers (CSPs) in building their own data center infrastructure in the UAE.

Source: BlueWeave Consulting

UAE Data Center Market – By Size

UAE Data Center Market by size is divided into Small Data Centers, Mid-size Data Centers, and Large Data Centers segments.

UAE Data Center Market – By Industry Vertical

On the basis of industry vertical, UAE Data Center Market is divided into Banking, Financial Services, and Insurance (BFSI), Government, IT & Telecom, Media, Retail, Manufacturing, and other industry verticals segments. The IT & telecom segment holds the largest share of UAE Data Center Market by industry vertical. The segment’s dominance is driven by their significant investments and key role in the region’s digital transformation. In 2023, global data center investments surged, with the UAE emerging as a leader, expected to reach over USD 7 billion by 2029. Telecom companies, such as du, e&, Carrier & Wholesale, and stc, are at the forefront, developing state-of-the-art facilities to meet rising demand for advanced digital infrastructure, including edge computing for real-time data processing. These telecom players are also enhancing multi-cloud environments and strengthening cybersecurity, while major IT players like AWS, Oracle, and Google Cloud are heavily investing in co-location services and cloud solutions. The UAE, a major hub for these investments, is witnessing rapid digital expansion, with global cloud service providers bolstering regional infrastructure. The synergy between telecom and IT companies is crucial, as telecom operators leverage their connectivity expertise to improve data center performance, and IT companies drive innovations in cloud services and digital applications. Supported by government initiatives like the UAE’s Digital Transformation Strategy, the combined efforts of these sectors are shaping the future of data center investments in the region, positioning the UAE as a global leader in data center infrastructure.

Competitive Landscape

Major players operating in UAE Data Center Market include Amazon Web Services (AWS), Core42 (a G42 Company), du (Emirates Integrated Telecommunications Company), e& (Etisalat and), Equinix, Gulf Data Hub, Khazna Data Centers, Microsoft (Azure), Moro Hub (DEWA), Oracle, Pure Data Centres, and Quantum Switch Tamasuk. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In November 2024 - Qareeb Data Centers, based in Bahrain, signed a Memorandum of Understanding (MoU) with Gcore, a leading company offering edge AI, cloud, network, and security solutions, to provide scalable, secure, and innovative cloud solutions in UAE.

Scope of the Report

By Component

• Hardware

• Software

• Service

By Type

• Enterprise Data Centers

• Colocation Data Centers

• Edge Data Centers

• Hyperscale Data Centers

By Size

• Small Data Centers

• Mid-size Data Centers

• Large Data Centers

By Application

• Banking, Financial Services, and Insurance (BFSI)

• Government

• IT & Telecom

• Media

• Retail

• Manufacturing

• Others