Overview
The Knight Frank Report focuses on the Middle East and North African (MENA) region, covering the markets of UAE, Saudi Arabia, Israel, Morocco, and Egypt.
Despite the inflated cost of debt, power constraints and geopolitical tensions, market growth in the region during 2023 has been notable. The MENA markets have recorded a combined uplift of 20.7% in live IT capacity during the year, with further growth anticipated following a steady flow of significant pipeline projects being announced.
In the UAE, global technology giant Microsoft will partner with G42 Cloud to jointly offer sovereign cloud services, thus further expanding Microsoft’s presence in the country. The collaboration will allow UAE public sector and regulated industries to use new platform capabilities for securing sensitive data, providing access to the latest Cloud and AI features available on Azure public cloud, and support compliance with local privacy and regulatory requirements.
Egypt and Morocco will benefit from the completion of the Medusa subsea cable network, a project that will bolster connectivity between southern Europe and North Africa. At 8,700 km, the Medusa will be the longest submarine fibre optic cable in the Mediterranean. The project’s total estimated cost is €342 million, with the first phase Western end of operation, scheduled to begin in 2025, followed by the eastern section in 2026.
In Saudi Arabia, Edgnex has signed an agreement with Integrated Telecom Company fibre firm Cinturion Corporation and Emaar, The Economic City, for new telecoms and digital infrastructure. Part of the UAE property firm Damac Group, Edgnex is building facilities in Dammam and Riyadh, which will deliver 55MW once fully complete. Edgnex also has plans for a data centre in Amman, Jordan.
The headline numbers and market activity reflect the prospects of the region.
Total market capacity, including both live and pipeline (under construction, committed and early stage) capacity, across these five markets has reached 1,688MW, a notable uptick of 208MW on Q4 2022 levels, and a 14.1% growth in total supply in 2023. Much of the recent growth can be attributed to demand from Cloud deployment across the regions.
The UAE continues to draw attention. Gulf Data Hub (GDH) has begun the expansion of its campuses in Dubai Silicon Oasis (DSO), KIZAD, and ICAD. As of Q3, the UAE’s aggregate supply stood at 597MW, compared with 450MW in Q3 2022, reflecting a 147MW increase over 12 months. Large development projects such as Khazna AUH6, DXB2 and DXB3 remain in the pipeline, whilst recent take-up has been primarily accounted for by public cloud consumption. As the UAE continues with both deregulation and digitalisation, the region is tipped to see further development.
Similarly, data centre activity in Israel continues, principally driven by Cloud. Amazon Web Services (AWS) have recently launched three cloud regions nationwide, with sites at Shoham, Beit Shemesh and Tnuvnot. Techtonics has also announced a new 10.5MW facility in Beit Shemesh. Aggregate supply has increased to 280.6MW at the end of Q3 2023, a significant uptick from the 186.6MW recorded in Q3 2022.
As of Q3 2023, the total aggregate supply in Saudi Arabia stood at 591MW, with 29MW added over the past 12 months. In terms of take-up, 10.4MW of IT capacity has been absorbed since Q3 2022. In Q3, Center3’s expansion in Khurais was launched, and Tonomus opened its first 12MW facility in NEOM. Major cloud providers are expected to continue to target Saudi Arabia to service both business and societal demands alongside governmental requirements and the rise of AI applications. In September, Chinese technology giant Huawei announced its new cloud data centre in Riyadh as part of its planned expansion into the Middle East.
In Morocco, AIIM has announced an initial $90 million investment into the region as part of the AIIF4 infrastructure fund, with a short-term deployment target of 40MW. Whilst in Egypt, Khazna Data Centers is continuing development of its $250 million state-of-the-art facility in Cairo.
