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
  • Oman’s Nama PWP tenders consultancy contract

    3 April 2026

    Oman’s Nama Power and Water Procurement Company (Nama PWP) has opened a tender for the provision of environmental, social and governance (ESG) reporting consultancy services.

    The tender seeks proposals from interested parties to support the utility in assessing its ESG maturity and identifying gaps against the Oman Investment Authority’s ESG guidelines.

    The deadline for firms to submit offers is 10 May.

    According to the tender notice, the selected consultant will develop the required ESG policies, strategy, report and implementation roadmap.

    Nama PWP, part of Nama Group, said the scope of work is intended to support the company’s wider ESG framework as it continues to procure new power and water capacity in Oman.

    The utility also recently opened a tender seeking proposals from qualified law firms to provide legal consultancy services in Oman.

    The selected firms will be included on a panel and engaged on an as-needed basis. They will deliver legal advisory services across a range of matters relevant to Nama PWP’s business.

    The deadline for firms to submit offers is 21 April.

    In March, the state utility released its latest seven-year plan outlining rapid expansion of solar and wind projects.

    It expects the renewable energy share of Oman's power generation mix to increase steadily across the period, reaching 16% in 2028 and 21% in 2029 before rising to 30% in 2030. This compares to about 4% in 2024.

    The pipeline includes a series of large-scale independent power projects (IPPs) scheduled for delivery between 2027 and 2031.

    Solar photovoltaic (PV) capacity in the sultanate is projected to rise from 1.54GW in 2024 to 23.26GW by 2031. Wind capacity is expected to grow from 120MW to 6.75GW, 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16249021/main.jpg
    Mark Dowdall
  • Construction ramps up for $1bn Egypt phosphate project

    3 April 2026

     

    Construction activity is ramping up on the site of the $1bn phosphate complex project in Egypt’s Sokhna Industrial Zone, according to industry sources.

    Workers were first deployed at the site in February and construction is ongoing, sources said.

    In November, Egypt’s Prime Minister Moustafa Madbouli attended the signing ceremony for the establishment of the complex.

    The contract was signed between Egypt’s Elsewedy Industrial Development and China’s Kunming Chuanjinnuo Chemical Company (CJN).

    The project is being developed on a site covering 905,000 square metres and will be implemented across three consecutive phases, with an estimated total investment of $1bn.

    Under current plans, a substantial portion of the complex’s output will be allocated to export markets in South Asia, the Middle East, Africa and South America.

    The first phase is scheduled to start commercial operations in 2028.

    This stage is focused on increasing the value-added content of Egyptian phosphate ore through the production of phosphoric acid along with diammonium phosphate (DAP) and triple superphosphate (TSP) fertilisers.

    The second phase, set to launch in 2029 and operate commercially by 2031, will expand into high-purity phosphate chemicals, including purified phosphoric acid (PPA) and monopotassium phosphate (MKP).

    The third phase, beginning in 2032 with commercial operation targeted for 2034, will shift toward new-energy materials, particularly those used in electric-vehicle battery production.

    Key outputs will include lithium iron phosphate (LFP) and lithium dihydrogen phosphate, supporting Egypt’s emergence as a growing hub for advanced battery materials and green-energy technologies.

    The project also includes establishing a specialised research and development centre focused on advancing phosphate-based chemical technologies.

    The centre will promote industrial localisation, support technology transfer, and strengthen Egypt’s scientific and technological capabilities in high-value chemical manufacturing.

    MEED’s March 2026 report on Egypt includes:

    > COMMENT: Egypt’s crisis mode gives way to cautious revival
    > GOVERNMENT: Egypt adapts its foreign policy approach
    > ECONOMY & BANKING: Egypt nears return to economic stability
    > OIL & GAS: Egypt’s oil and gas sector shows bright spots
    > POWER & WATER: Egypt utility contracts hit $5bn decade peak
    > CONSTRUCTION: Coastal destinations are a boon to Egyptian construction

    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16240318/main.jpg
    Wil Crisp
  • Saudi Arabia seeks firms for food testing labs PPP project

    2 April 2026

    Saudi Arabia’s Ministry of Municipalities & Housing, in collaboration with the National Centre for Privatisation & PPP (NCP), has issued an expression of interest (EOI) notice for a contract to develop and operate municipal food safety laboratories under a public-private partnership (PPP) framework.

    The project will be delivered on an equip, operate, maintain and transfer basis, with a contract duration of five years.

    The EOI was issued on 1 April, with a submission deadline of 15 April.

    The project scope covers the equipping, operation and maintenance of municipal food safety laboratories across five municipalities: Hafr Al-Batin, Northern Borders, Tabuk, Qassim and Al-Ahsa.

    Key objectives include upgrading laboratory equipment, expanding chemical and microbiological testing capacity for food and water products, and enhancing testing accuracy to support laboratory compliance across the value chain. The project also aims to ensure effective knowledge transfer and a structured handover to the relevant municipalities at the end of the contract term.

    NCP said in a statement: “The project is intended to strengthen public health and safety standards for citizens and residents of the kingdom in alignment with Saudi Vision 2030, while developing the municipal monitoring ecosystem, optimising food and water testing services, and enabling private sector participation in accordance with global best practices.”

    In October last year, NCP highlighted the scale and diversity of opportunities in the kingdom’s PPP pipeline.

    “At the moment, we have around 200 projects in the pipeline with a total value of roughly $190bn,” said Salman Badr, executive vice president – infrastructure advisory, NCP, during a MEED webinar.

    The projects are spread across 17 sectors. “We have a very sizable programme, and it reflects the breadth of the kingdom’s transformation agenda,” he said.

    NCP was established in 2017. It serves as the central authority and catalyst for designing and implementing privatisation and PPP projects across the kingdom.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16236864/main.gif
    Yasir Iqbal
  • Parsons to project manage Al-Ittihad Sports Village in Jeddah

    2 April 2026

    US-based engineering firm Parsons Corporation has been awarded a contract by Saudi Arabia’s Al-Ittihad Club Company to act as project management consultant for the Al-Ittihad Sports Village in Jeddah.

    Under the contract, Parsons will support the project during the design stage.

    The sports village will be developed near King Abdullah Sports City and will include Al-Ittihad’s headquarters, academy training pitches and supporting facilities, performance development centres, administrative offices and a range of commercial components.

    The development is being designed in line with Fifa requirements and international best practices, with the aim of strengthening high-performance sports infrastructure in Saudi Arabia.

    The latest award follows Parsons’ recent appointment to a 60-month contract by the Public Investment Fund-backed New Murabba Development Company to provide design and construction technical support.

    As part of that role, Parsons will support the development of the project’s downtown area, which will span 14 million square metres of residential, workplace and entertainment space.

    In October last year, Parsons announced it had secured a SR210m ($56m) contract from Diriyah Company. Its scope includes the design and construction supervision of infrastructure works in phase two of the Diriyah project, covering streets, footpaths, open spaces, and civic buildings and facilities.

    In May last year, Parsons also confirmed its appointment as delivery partner for the airside and landside packages at King Salman International airport in Riyadh.

    In a statement, Parsons said it had signed two contracts with King Salman International Airport Development Company. The first covers airfield assets, including runways, taxiways, aircraft parking areas and air traffic control towers.

    The second contract relates to landside infrastructure, including roads, utilities, tunnels, bridges, rail networks and landscaping.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16233673/main.jpg
    Yasir Iqbal
  • Read the April 2026 MEED Business Review

    2 April 2026

    Download / Subscribe / 14-day trial access

    When the first missiles and drones were fired at the GCC on 28 February, the region’s economic story pivoted abruptly, from long-term vision-building to near-term resilience.

    The conflict is now the Gulf’s most consequential economic stress test in a generation. It is challenging the safe haven premium that underpins capital inflows, while disrupting the physical networks that keep the region’s economies running, from energy exports and shipping lanes to airports and tourism.

    MEED editor Colin Foreman asks whether the GCC can sustain investor confidence as energy assets, trade routes, airports and banks absorb the shock. Read more here.

    April’s market focus is on Saudi Arabia, where the Iran war is compounding the logic behind the kingdom’s strategic pivot in its investment plans.

    This edition also includes MEED’s 2026 GCC contractor ranking, in which Chinese firms have surged to the top as Saudi spending cuts and geopolitical risks weigh on GCC construction activity.

    In the latest issue, we explore the region’s evolving arbitration landscape; present exclusive leadership insight from Jacobs on the future of passenger rail in the Middle East; and talk to Leyla Abdimomunova, head of real estate and construction at the Public Investment Fund’s National Development Division, about remaking Saudi construction.

    We hope our valued subscribers enjoy the April 2026 issue of MEED Business Review. 

     

    Must-read sections in the April 2026 issue of MEED Business Review include:

    > AGENDA: Gulf economies under fire

    INDUSTRY REPORT:
    GCC contractor ranking
    > Construction guard undergoes a shift

    > LEGAL: Redefining the region’s arbitration landscape

    > QATAR LNG: Qatar’s new $8bn investment heats up global LNG race  

    > INTERVIEW: Leyla Abdimomunova, National Development Division, PIF

    > LEADERSHIP: Shaping the future of passenger rail in the Middle East 

    > SAUDI MARKET FOCUS: 
    > COMMENT: Risk accelerates Saudi spending shift
    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    > MEED COMMENTS: 
    >     Iran war erodes LNG’s image of reliability
    > Dubai's real estate faces a hard test
    > Energy resilience matters as much as capacity
    > Drawn-out conflict may shift planning priorities

    > GULF PROJECTS INDEX: Gulf index rises amid tensions

    > FEBRUARY 2025 CONTRACTS: Middle East contract awards

    > ECONOMIC DATA: Data drives regional projects

    > OPINION: The end of the republic and the end of times

    > BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16222272/main.gif
    MEED Editorial