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How UAE data centres became Middle East market leaders

Khazna Data centre
The move to open three new UAE data centres by AWS signals increasing confidence in the UAE as a key market for data infrastructure in the Middle East.

Internet access and digitalisation gained global impetus in 2020, and COVID-19 put the onus on government bodies to amp up monitoring initiatives as a means to curb the spread of the virus. In this respect, the demand for data centres has been climbing, and UAE data centres have a lot to gain.

The global market for data centres is expected to grow at an annual rate of 4.5% until 2026. The Middle East data centre market, however, beats the average, with 7% forecasted annual growth rate for the period, according to research by Reportlinker.

DATA CENTRES AS AN INVESTMENT OPPORTUNITY

The study by Reportlinker suggested that the outbreak of the pandemic led to a growth in demand for internet services, data analytics, 5G, and Internet of Things devices (especially in healthcare).

Further, social distancing and lockdowns added pressure on enterprises to migrate their on-premises data infrastructure to a more hybrid format through cloud technology. This was on top of other tech initiatives that were already underway across the world, both at the enterprise level and by government bodies.

The resulting demand has brought the market for data centres into the spotlight. Yields on data centres became much more attractive, growth potential leaped, and investors and developers started to look more closely at investment opportunities as yield compression grew stronger.

UAE Data centre

INVESTMENT POTENTIAL FOR UAE DATA CENTRES

Globally, data centres tend to be clustered in the US, Europe, and APAC region. At the same time, the UAE recently emerged as one of the top destinations for new data centres, joining the likes of the US, Singapore, Japan, Sweden, Norway, and Denmark. A 2020 report also noted that the UAE was a preferred location for data centre investments in the Middle East. 

Amazon Web Services (AWS) announced this week that it will be opening a new infrastructure region in the UAE, which will be home to three new data centres. This will be the second such AWS infrastructure region in the Middle East, after Bahrain. 

The deal “supports the UAE’s focus on promoting technology innovation that has made it a thriving global hub for entrepreneurs, e-governments, and multinational businesses,” Peter DeSantis, a senior VP at AWS, said

Last year, du had also announced that it would be opening two new UAE data centres, located at Dubai Silicon Oasis and the Khalifa Industrial Zone Abu Dhabi.

Interest from local and international players such as these indicate a growing market for UAE data centres, and a valuable market opportunity for investors in this space.

Photo credit: www.datacentercatalog.com/united-arab-emirates , www.linesight.com/en-us/projects/nbad/

 

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