meed-logo

line1 line2 line3
SIGN IN / REGISTER

Data centre activity soars in Saudi Arabia

23 February 2024

Saudi Arabia is experiencing a major uptick in the construction of data centre assets across the country.

Despite the preference for data centres to be inconspicuous due to security concerns, it is not uncommon to see certain construction sites or completed facilities marked clearly as such when one navigates the capital city, Riyadh.

Data sovereignty regulations as well as the widespread use of electronic commerce and social media particularly by young Saudis are driving the data centre construction boom, notes a Riyadh-based expert.

Government agencies, banks, and family-owned conglomerates, in addition to local and international data centre developers and operators, have either started constructing or are planning to start the construction of data centre facilities across Saudi Arabia. 

The value of known data centre projects pipeline in the kingdom falls under $1bn, according to regional projects tracking service MEED Projects. While this value corresponds to just one utility-scale renewable energy plant or a minor upgrade of an oil production facility in Saudi Arabia, future plans point to a major expansion of such facilities, which underpin the kingdom's digital hub and artificial intelligence (AI) strategies.

For instance, the government announced in 2021 a plan to build a network of large-scale data centres that will require investments of up to $18bn by 2030.  At the time, the kingdom's Communications & Information Technology Ministry (MCIT) tapped local firms Gulf Data Hub, Al-Moammar Information Systems and Saudi FAS Holding as its initial partners for the scheme. 

The following year, Saudi-headquartered Quantum Switch Tamasuk (QST)  unveiled plans to design and operate data centre projects with a cumulative total capacity of 300MW for the MCIT  by 2026. The project will comprise six locations across Riyadh, Dammam, Jeddah and Neom, with a reported budget of at least $2bn.

Foreign investments have started pouring in to accommodate the rising capacity demand as well as the kingdom's ambition to become a digital hub.

Dubai developer Damac Properties-owned Edgnex is constructing a data centre, which will have a minimum capacity of 20MW, at Industrial City 2. 

In October last year, South Korea’s second-largest telecoms company, KT, in collaboration with Hyundai Engineering & Construction (Hyundai E&C) and the local telecoms group STC, signed a memorandum of understanding (MoU) to construct internet data centres (IDC) and smart cities in the kingdom. 

Similarly, the UAE-based cloud and data service provider Khazna Data Centres also plans to build data centres in Saudi Arabia as it executes its overseas expansion plans. 

In May last year, sovereign vehicle, the Public Investment Fund (PIF), teamed up with US-based infrastructure investor and asset manager DigitalBridge to develop data centres and related digital infrastructure in Saudi Arabia and across the GCC states.

Telecoms service provider Zain is also expected to build a new data centre with some support from the kingdom's SR5tn ($1.35tn) Shareek private sector investment programme.

Crucially, US-headquartered IT and cloud services giants Microsoft and Oracle pledged at the annual Riyadh tech conference, Leap, last year, to invest a total of $9bn in the kingdom. This will go into the construction of multiple data centres to form a so-called cloud region catering to Saudi Arabia and the wider Middle East region.

Similarly, Chinese tech firm Huawei has pledged to invest $400m to build cloud services in the kingdom.

"The demand is there that's why we are focusing on these projects," said the Riyadh-based construction expert, who also acknowledges that the depreciation rate for data centres is higher compared to real estate assets due to the high obsolescence of technology and the need to replace data centre components frequently.

Digital hub

A growth in the number of subsea cable landing sites in the kingdom is occurring in parallel with the substantial growth in data centre facilities and capacity.

A 45,000-kilometre subsea cable network connecting Africa, Asia and Europe, 2Africa, reached two of its four landing sites in Saudi Arabia in May 2023. The landing sites are in Jeddah and Yanbu.  The cable is expected to reach the third landing site in Duba late last year and the fourth site in Al-Khobar in 2024.

Once completed, 2Africa will connect Saudi Arabia to 33 countries, bringing the kingdom closer to its goal of becoming a digital hub.

The stakes are high for the kingdom, which has simultaneously launched plans to industrialise its economy, decarbonise its industries, increase localisation and reach net-zero carbon emissions by 2060.

While constructing energy-intensive data centres – which globally account for 1% of energy-related greenhouse gas emissions –  may seem counter-intuitive to these objectives, the rapid advancements in cooling and other data centre components, as well as the potential deployment of clean energy to power them, are expected to ease these assets' environmental impact.

 

https://image.digitalinsightresearch.in/uploads/NewsArticle/11543521/main.jpg
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Arada awards $408m W Residences Dubai Harbour contract

    23 February 2026

    Register for MEED’s 14-day trial access 

    Sharjah-based real estate developer Arada has awarded a AED1.5bn ($408m) contract for the main construction works on its W Residences project at Dubai Harbour.

    The contract was awarded to the local Engineering Contracting Company.

    The development comprises 490 branded residences across three towers.

    The project's enabling works, including excavation and piling, have begun and are being carried out by another local firm, APCC Piling & Marine Contracting.

     Arada has awarded APCC a separate AED51m ($14m) contract to undertake the enabling works.

    The development will consist of residential, retail and leisure facilities and will be operated by US-based Marriott International.

    Arada launched the project in October 2024, as MEED reported.

    The latest contract award follows Arada's award of two contracts, worth AED2.7bn ($735m), for construction work on all four phases of the Masaar 2 residential community in the Rowdat district of Sharjah.

    Arada awarded Sharjah-based Intermass Contracting a contract for the construction of phases one, three and four.

    Abu Dhabi-based contractor Pivot Engineering & General Contracting won a contract to build the second phase of the project.

    The overall scheme encompasses the construction of 1,997 residential units across all four phases.

    Construction is expected to begin shortly, and the project is slated for completion by 2028.

    Arada is the developer behind three masterplanned residential communities in Sharjah. The Aljada, Masaar and Nasma Residences communities are valued at a combined AED33bn.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15717440/main.jpg
    Yasir Iqbal
  • Seven companies show interest in $3.3bn Kuwait gas project

    23 February 2026

     

    At least seven companies have shown interest in participating in the planned tender for a Kuwait Gulf Oil Company (KGOC) project to develop an onshore gas plant, according to industry sources.

    The project budget is estimated to be $3.3bn and the last meeting with contractors to discuss the project took place in Kuwait on 10 February.

    Previous meetings with contractors took place at the offices of Technip Energies in Abu Dhabi.

    Contractors that have sent representatives to the meetings include:

    • Samsung E&A (South Korea)
    • Larsen & Toubro (India)
    • Tecnicas Reunidas (Spain)
    • Saipem (Italy)
    • Hyundai Engineering & Construction (South Korea)
    • Hyundai Engineering Company (South Korea)
    • JGC (Japan)

    At the last meeting, contractors were told that the invitation to bid is currently scheduled to be issued at the end of March.

    It was also confirmed that Kuwait’s Central Agency for Public Tenders (Capt) will not be involved in the tender process.

    Capt is supposed to review technical and commercial evaluations of bids and verify that bidding is competitive.

    It is understood that not requiring Capt to approve this tender will speed up the tender process.

    The plant will have the capacity to process up to 632 million cubic feet a day of gas and 88.9 million barrels a day of condensates from the Dorra offshore field, located in Gulf waters in the Saudi-Kuwait Neutral Zone.

    In July last year, MEED reported that KGOC had initiated the project by launching an early engagement process with contractors for the main engineering, procurement and construction tender.

    France-based Technip Energies completed the contract for the front-end engineering and design.

    The facility will be developed next to Kuwait’s Al-Zour refinery.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15717358/main.png
    Wil Crisp
  • Egypt tenders 500MW solar IPP

    19 February 2026

    Register for MEED’s 14-day trial access 

    Egyptian Electricity Transmission Company (EETC) has issued a request for qualifications for a 500MW solar photovoltaic (PV) independent power producer project in Egypt’s West of Nile area.

    The bid submission deadline is 11 May.

    The project is being supported by the European Bank for Reconstruction & Development and will be developed under a build-own-operate model.

    Developers will be responsible for designing, financing, constructing, owning and operating the plant, with EETC acting as the offtaker for generated electricity.

    US/India-based Synergy Consulting is acting as lead, financial and commercial advisor for this transaction.

    The project forms part of Egypt’s strategy to strengthen long-term electricity supply and increase renewable generation capacity.

    Egypt is targeting 42% renewable energy in its power mix by 2030. The country aims to raise this share to 65% by 2040.

    EETC previously had plans to build a 200MW solar plant in a west Nile area but cancelled the tender for the project in 2020.

    Egypt's power sector had its strongest year in over a decade last year, accounting for $4.2bn of total contract awards.

    Despite dipping from the previous year, solar accounted for about $1bn of total awards. 

    In November, a consortium of local firms Hassan Allam Utilities and Infinity Power won contracts to develop two solar PV projects with a combined capacity of 1,200MW, supported by 720 megawatt-hours (MWh) of battery storage.

    The UAE’s Amea Power and Japan’s Kyuden International Corporation also recently reached financial close on a $700m project comprising a 1,000MW solar plant and 600MWh battery system in Aswan.

    The scheme is backed by a $570m debt package led by the International Finance Corporation and is expected to become Africa’s largest single-asset solar and storage facility when it enters operation later this year.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15701778/main.jpg
    Mark Dowdall
  • Local contractor wins $143m Jeddah sewage contracts

    19 February 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s National Water Company (NWC) has awarded two sewage network contracts worth a combined SR536.3m ($143m) to local contractor Civil Works Company.

    The projects will be implemented over 32 months from site handover and will serve northern Jeddah districts.

    The first contract, valued at SR278.5m ($74.3m), covers incomplete main lines and secondary sewage networks serving parts of the Al-Bashair, Al-Asala and Al-Falah neighbourhoods.

    The scope includes pipelines ranging from 200mm to 800mm in diameter with a total length of about 54.8 kilometres (km).

    The package also includes sewage tunnels with diameters ranging from 600mm to 1,800mm and a total length of approximately 6.5km. Works will also serve the Taybah, Abhar Al-Shamaliyah and Al-Hamdaniyah districts.

    The second contract is valued at SR257.8m ($68.8m). It covers the implementation of main lines and sub-networks to serve part of the Al-Hamdaniya neighbourhood.

    The works include pipelines ranging from 200mm to 1,500mm in diameter with a total length of about 78.5km. The scope also includes horizontal drilling works for sewage tunnels with diameters from 1,200mm to 1,400mm and a total length of approximately 205 metres.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15699620/main.jpg
    Mark Dowdall
  • Saudi Arabia prequalifies firms for gas transmission grids

    19 February 2026

    Register for MEED’s 14-day trial access 

    Saudi Arabia's Energy Ministry has prequalified companies to develop natural gas distribution networks in five industrial cities in the kingdom on a build-own-operate (BOO) basis.

    The industrial zones earmarked are Al-Kharj Industrial City; Sudair City for Industry and Business; and the First, Second and Third Industrial Cities in Jeddah, the Energy Ministry said in a statement.

    The contractors prequalified to bid for the natural gas transmission grids BOO scheme include eight standalone firms and seven consortiums:

    • East Gas (Egypt)
    • Natural Gas Distribution Company (Saudi Arabia)
    • Egyptian Kuwaiti Advanced Operation and Maintenance (Saudi Arabia)
    • Modern Gas (Egypt)
    • Saab Energy Solutions (Saudi Arabia)
    • Sergas Contracting (Saudi Arabia)
    • Bharat Petroleum Corporation (India)
    • UniGas Arabia (Saudi Arabia)
    • Best Gas Carrier / Khazeen / Mubadra (Saudi Arabia)
    • Al Sharif Contracting (Saudi Arabia) / Anton Oilfield Services Group (China) China Oil and Gas Group
    • Hulul (owned by Saudi Arabia’s National Gas and Industrialization Company) /Al-Fanar Gas Group (UAE)
    • Indraprastha Gas (India) / Masah Contracting (Saudi Arabia)
    • Expertise Contracting / PGL Pipelines (UK)
    • National Gas Company (Egypt) / Egypt Gas (Egypt)
    • Taqa Arabia (Egypt) / Taqa Group (UAE)

    The Energy Ministry has set a deadline of 23 April for these prequalified contractors to submit technical bids.

    The ministry added in its statement that it has identified a total of 36 industrial cities in Saudi Arabia for gas infrastructure development.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15699582/main0334.png
    Indrajit Sen