meed-logo

line1 line2 line3
SIGN IN / REGISTER

Data centres churn investments

8 May 2025

 

Global investment firm KKR appointed retired US Army general and former Central Intelligence Agency director David Petraeus as chairman of its Middle East operations in mid-April.

The move is indicative of the region’s importance as a destination for the firm’s future investments, and capitalises on the strength of the relationships Petraeus has forged with Gulf country leaders during his years as a top US military strategist.

KKR’s most recent commitment in the region entails acquiring a stake in UAE-based Gulf Data Hub (GDH), which operates seven data centres in the UAE and Saudi Arabia. The UAE firm plans to build additional data centre facilities in Kuwait, Qatar, Bahrain and Oman, and KKR has committed to support its $5bn expansion plan.

“[Petraeus' appointment] is a good move on their part. It reinforces the region’s growing status and importance as a data centre investment destination, due to a significant interest in artificial intelligence (AI) deployments,” says a senior executive with an international data centre operator.

KKR’s prior investments in the region include a partnership with Abu Dhabi National Oil Company (Adnoc) in 2019 to create Adnoc Oil Pipelines, and acquiring a portfolio of commercial aircraft from Abu Dhabi’s Etihad Airways in 2020.

The private equity firm’s investment in GDH, however, shows only part of the picture as far as the rapidly evolving data centre investment landscape is concerned.

In March, Abu Dhabi-based critical infrastructure-focused sovereign investor ADQ and US-headquartered power developer Energy Capital Partners agreed to establish a 50:50 partnership to build new power generation and energy infrastructure that will serve the long-term needs of data centres and industrial clusters in the US and selected other international markets.

The two firms plan to make total capital investments of more than $25bn across 25GW-worth of projects. The combined initial capital contribution from the partners is expected to amount to $5bn.

That announcement came a day after UAE National Security Adviser and Deputy Ruler of Abu Dhabi, Sheikh Tahnoon Bin Zayed Al-Nahyan, met with US President Donald Trump at the White House. During the meeting, the UAE is understood to have committed to a 10-year, $1.4tn investment framework for the US.

Tech funds

In the past 24 months, Abu Dhabi and Riyadh in particular have set up funds, sometimes in partnership with global firms, to invest in AI and data centre infrastructure, both domestically and abroad.

Abu Dhabi’s MGX aims to build $100bn in assets under management within a few years, along with US-headquartered and Blackrock-backed Global Infrastructure Partners and Microsoft, the fund's key partners. It is part of the US’ Stargate consortium, which aims to mobilise up to $500bn to build AI infrastructure in the US over the next four years.

In Riyadh, a $100bn AI initiative known as Project Transcendence is expected to invest in data centres, technology startups and other related infrastructure for the development of AI.

US-based Silver Lake announced in March 2025 that, together with MGX, it has become a minority shareholder in state-backed, Abu Dhabi-based Khazna Data Centres, one of the region’s largest data centre operators.

In 2023, Saudi sovereign wealth vehicle the Public Investment Fund (PIF) partnered with US-based DigitalBridge to develop data centres in Saudi Arabia and across the GCC states.

In early 2025, Saudi Arabia-based DataVolt – which is owned by Vision Invest, a major shareholder in Saudi utility developer Acwa Power and a public-private partnership advocate – signed a preliminary agreement to build a data centre in Neom, Saudi Arabia. The $5bn facility, with an initial phase of 300MW, is the first of many such schemes that DataVolt is planning.

Not to be outdone, the founder of Dubai-based private real estate developer Damac pledged to invest $20bn in data centre projects in several US cities earlier this year.

And there is more to the growing – if outsized – number of bidirectional data centre-focused investment flows than meets the eye.

Given the global AI race and mounting competition, investment decisions regarding data centres are moving from a simple, commercial focus to account for complex geopolitical considerations, according to Jessica Obeid, a partner at Dubai-headquartered New Energy Consult.

“As the US weaponises its technological advancements, decisions to invest in US-based data centres hedge against the risks of US export controls, positioning developers in proximity to suppliers, ensuring reliable access to components.

“Yet, this access could become costlier, driven by trade tariff wars, heightened regulations and limited access to grid infrastructure,” Obeid says.

She adds that the GCC is quickly positioning itself as a global digital hub, driven by cost-competitive energy, advanced infrastructure and strong government backing.

“Proximity to reliable power supply at an affordable cost, and speed in licensing processes and grid connections, are increasingly becoming strategic factors in data centre deployment – and the GCC offers that.”

Powering AI strategies

Almost all of the GCC states have formulated AI strategies that aim to improve operational efficiencies, create jobs and support their energy transition and net-zero initiatives.

As a result, analysts expect the region to register double-digit annual growth in data centre construction activities in the next few years.

In a recent update, global consultancy PwC projected that the Middle East data centre capacity could triple from 1GW in 2025 to 3.3GW in five years’ time.

According to data from regional projects tracker MEED Projects, as of April, an estimated $12bn-worth of data centre construction projects are in the planning stage, in addition to over $820m under bid and $7bn under construction.

Li-Chen Sim, associate fellow, at US Middle East Institute,  says that AI investments are, on the one hand, “all part of a carefully conceived strategy to … diversify out of a hydrocarbons-driven economy, to create new revenue streams from overseas data centres, build new growth sectors, support business requirements and offer more knowledge-based jobs as opposed to traditional manufacturing from domestic investments”.

On the other hand, AI investments also aim to future-proof the hydrocarbons sector, which Sim expects will continue to be a significant driver of growth, revenue and exports, even as the use of renewable power grows.

However, the ability of Gulf states to execute their plans for leveraging AI to diversify economies and create jobs –and specifically to address youth unemployment – depends on two factors, according to Obeid.

The first factor is the ability of countries to advance their AI goals from infrastructure to capital and partnerships. The second involves the speed with which they can build up adequate human capital and a skilled workforce.

“We will have to see how governments align their educational curricula with the AI policies and electricity infrastructure development,” she says.

Ecosystem investment

AI and data centre investments go beyond the facilities that house thousands of advanced graphics processing units, miles of cables and many cooling systems. To run and execute applications – particularly AI inferencing tasks – data centre facilities require a substantial amount of energy. 

Moreover, data centres in the Middle East and North Africa region face elevated environmental risks due to the high ambient temperatures, which increase energy demand for cooling, as well as water requirements.

This presents both a challenge and an opportunity, according to Obeid. "The GCC has an opportunity to advance innovation in energy and cooling technologies. Liquid cooling is necessary for AI workloads, and small modular reactors will become central in these data centres.” 

In January, Abu Dhabi’s Emirates Water & Electricity Company (Ewec) appeared to show the way with a plan to build a round-the-clock solar photovoltaic (PV) plant combined with a battery energy storage system (bess) facility.

The 5.2GW solar PV and 19 gigawatt-hour bess plant is expected to deliver renewable power as baseload, and UAE President Sheikh Mohamed Bin Zayed Bin Sultan Al-Nahyan has said that the project will help power advancements in AI and emerging technologies, and support the delivery of the UAE National AI Strategy 2031 and 2050 Net Zero initiative.

Sim agrees that renewables combined with battery storage is part of the answer when it comes to building sustainable data centres. “Globally, data centres consume about 1% of electricity, and this figure – together with carbon emissions by data centres – is expected to grow significantly.”

He notes that Goldman Sachs Research forecasts that global power demand from data centres will increase 50% by 2027, and 165% by the end of the decade, compared to 2023.

“The other part of the puzzle with regard to sustainability is water consumption by data centres, particularly those in the Gulf, where high temperatures necessitate even more cooling measures.

“Singapore, for instance, has pioneered integrated water systems that recycle treated wastewater for reuse – and this circular water model could be an option for data centres in the Gulf, instead of using expensive desalinated water,” says Sim.

As things stand, the GCC can play a key role in the advancement of these and other technologies, along with efficiency measures and the optimisation of server utilisation through AI applications such as digital twins, says Obeid.

This is just as well, since the region appears to be on the cusp of a boom in inbound and outbound investments that will build data centre capacity abroad and closer to home.

“We are at a pivotal moment for innovation, where the intersection of digital advancements and energy innovation could position the GCC as a global leader, shaping the future of sustainable digital infrastructure,” concludes Obeid.

https://image.digitalinsightresearch.in/uploads/NewsArticle/13732105/main5907.jpg
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • Contractor begins Burj Khalifa metro station expansion works

    6 July 2026

     

    Dubai’s Roads & Transport Authority (RTA) has started construction on the expansion and upgrade of the Burj Khalifa/Dubai Mall metro station.

    The main construction works are being carried out by Turkish contractor Mapa Group.

    The RTA also announced that it is temporarily closing its bus and taxi service road at the metro station due to ongoing construction works, until the end of this year.

    The contract was tendered in January 2025, as MEED exclusively reported.

    The design-and-build contract covers the lift and station expansion works, including demolishing and replacing the existing pod entrance with a three-storey building. The new entrance will provide links to the Dubai Mall link bridge at the concourse level and a direct connection to the Rashidya platform.

    The project will add three new hydraulic lifts and four escalators. The concourse level will be expanded to include a connection to the link bridge and 10 new retail units.

    The project will also add two new hydraulic lifts and escalators within the Sheikh Zayed roadside extension serving the UAE Exchange platform.

    The Burj Khalifa/Dubai Mall station expansion was first tendered as part of the RTA’s plan to upgrade four Dubai Metro stations in 2018.

    Subsequently, the expansion works on the station were put on hold, whereas construction on the Damac, UAE Exchange and Dubai Internet City stations was completed in 2021.

    Local firm Al-Shafar General Contracting undertook the expansion works.

    Traffic at the Burj Khalifa/Dubai Mall station peaks on New Year’s Eve. In an official statement published by Emirates News Agency, the RTA said that last New Year’s Eve, Dubai Metro accommodated over 1 million passengers on its Red and Green lines, while the Dubai Tram transported 55,391 passengers.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17563784/main0706.png
    Yasir Iqbal
  • Morocco tenders 300MW El-Menzel pumped-storage plant

    6 July 2026

    Morocco's Office National de l'Electricité et de l'Eau Potable (Onee) has tendered the main engineering, procurement and construction (EPC) contract for the 300MW El-Menzel pumped-storage hydropower project.

    The bid submission deadline is 30 September.

    The El-Menzel pumped energy transfer station will be developed in the Sefrou area of Morocco's Fes-Boulemane region. The project is intended to support Morocco's renewable energy programme and contribute to the country's target of sourcing 52% of its energy mix from renewables by 2030.

    The project scope comprises upper and lower reservoirs, a 400kV substation and a 44-kilometre (km) transmission line. It also inlcudes the construction of 10km of access roads and associated facilities. The project is estimated to cost $244m.

    According to regional project tracker MEED Projects, three consortiums prequalified to bid for the EPC contract last year.

    They were:

    • China International Water & Electric, Yellow River Engineering Consulting (China), Harbin Electric Machinery (China), Harbin Electric International (China) and Jet Contractors (Morocco)
    • Sinohydro (China) and Andritz Hydro (Austria)
    • Webuild (Italy) and Dongfang Electric International Corporation (China)

    The project is being financed by the African Development Bank and Germany's KfW Development Bank.

    Morocco's renewable energy plans received a boost recently, when the World Bank approved $265m in financing for a separate 300MW pumped hydropower storage project in Ifahsa in Chefchaouen Province.

    The facility will act as a rechargeable battery for the national electricity grid, storing excess electricity generated from solar and wind projects before releasing it during periods of peak demand.

    The Ifahsa and El-Menzel projects are both being developed by Onee as part of a broader energy storage strategy that  targets 1GW of new pumped hydropower by 2030. 

    Onee commissioned the 350MW Abdelmoumen pumped-storage plant in 2024.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17562793/main.jpg
    Mark Dowdall
  • Iraq readies tender for additional Al-Faw port piers

    6 July 2026

    Iraq is preparing to issue a tender inviting international contractors to bid for a contract to build the remaining piers at Al-Faw Grand Port in Basra.

    According to local media reports, construction work on the project's first phase is expected to be completed by the end of this year.

    This will be followed by port operations, for which the client, state-owned General Company for Ports of Iraq, shortlisted three out of the initial 11 international companies that were invited to bid, as MEED reported last year.

    At the time, the shortlisted companies included:

    • China Merchants Port Group (China)
    • Evergreen (Taiwan)
    • CMA CGM (France)
    • Mediterranean Shipping Company (Switzerland)
    • Adani Group (India)
    • International Container Terminal Services (Philippines)
    • Cosco (China) 
    • ABM Global Shipping (UAE)
    • AD Ports (UAE)

    In April last year, Iraq’s Shafaq News Agency reported that the country was in talks with US-based KBR to assist in operating the Al-Faw port.

    KBR was expected to provide training in port operations and management to Iraqi personnel, along with related services.

    The first phase of the project is scheduled for completion by the end of this year, while the second phase is expected to be completed by 2029.

    The first phase of the project cost approximately $5bn, including $2.5bn for its five main piers, which were constructed by South Korea’s Daewoo Engineering & Construction.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17562198/main.jpg
    Yasir Iqbal
  • Frontrunner emerges for Bahrain’s Hidd IWP

    6 July 2026

     

    Saudi Arabia's Acwa has emerged as the frontrunner for a contract to develop and operate Bahrain’s Al-Hidd independent water project (IWP) following the disqualification of the only other bidder for the plant, a source has told MEED.

    The seawater reverse osmosis (SWRO) plant is the state's first IWP project. It is expected to have a production capacity of about 60 million imperial gallons a day (MIGD), equivalent to roughly 272,000 cubic metres a day of potable water.

    Acwa offered to develop the project at a levelised cost of water of BD0.276 ($0.73) a cubic metre, according to details published on Bahrain’s Tender Board on 2 July.

    GS Inima (South Korea/Spain) was the only other bidder for the project.

    Bids for the project had been submitted earlier this year.

    The source added that Acwa's financial bid is now under evaluation and has yet to be selected as the preferred bidder. This will only be determined "subject to compliance with the [request for proposal] requirements".

    Nine companies and consortiums had previously been shortlisted following the completion of the prequalification process last August.

    The facility will be developed on a brownfield site and is expected to be fully operational by 2029. It will be developed using a build, own and operate (BOO) model for 20-25 years and aims to help expand Bahrain’s water infrastructure to meet projected demand based on its 2030 masterplan.

    This includes doubling the state's installed power generation capacity to over 10GW by 2030, according to UK data analytics firm GlobalData.

    Sitra IWPP

    Bahrain's 1.2GW Sitra independent water and power plant (IWPP) project is also advancing, with two bids having been submitted for the plant in June.

    The offers were made by Acwa and Abu Dhabi National Energy Company (Taqa). The technical element of the bid was opened on 18 June.

    The Sitra IWPP is a combined-cycle gas turbine plant and is expected to have a production capacity of about 1,200MW of electricity. The project’s SWRO desalination facility will have a production capacity of 30 MIGD of potable water.

    The plant is Bahrain’s fourth IWPP, replacing the previously planned Al-Dur 3. The Sitra IWPP is expected to be fully operational by the second quarter of 2029.

    The Bahraini Electricity & Water Authority’s transaction advisory team for the two BOO projects comprises KPMG Fakhro as the financial consultant and Trowers & Hamlins as the legal consultant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17562089/main.jpg
    Mark Dowdall
  • Chinese contractor completes 70% of Iraq oil project

    6 July 2026

     

    The project to develop new crude oil processing facilities at Iraq’s Rumaila field is 70% complete, according to industry sources.

    The project scope for the planned plant in Mishrif Qurainat includes developing two new oil trains, each with a capacity of 120,000 barrels a day (b/d).

    When it was originally announced, the planned plant in Mishrif Qurainat was the first new crude oil processing facility project at the oil field in 10 years.

    In the fourth quarter of 2022, China Petroleum Engineering & Construction Corporation signed a contract for the design, procurement, construction and testing of the crude oil processing facilities.

    The contract was valued at about $386m, and construction was expected to take three years to complete.

    Since 2022, the project has seen significant delays and the date for completion is currently uncertain, according to industry sources, as bringing the new crude processing facility online is no longer a priority for the client.

    One source said: “Work is continuing on this project at a slow pace because the client is not prioritising commissioning the oil trains.

    “The companies that form the joint venture, which operates the Rumaila field, are dealing with a range of other issues right now as a result of the regional war and disruption to shipping through the Strait of Hormuz.”

    Rumaila is operated by Rumaila Operating Organisation (ROO).

    ROO is a joint venture formed by state-owned Basra Oil Company; Iraq’s State Oil Marketing Organisation (Somo); and Basra Energy Company, a joint venture owned by UK-based oil company BP and PetroChina.

    PetroChina is the listed arm of state-owned China National Petroleum Corporation.

    Oil exports from Iraq have dropped steeply since the US and Israel attacked Iran on 28 February, leading to a regional conflict.

    The conflict has caused significant disruption to Iraq’s oil exports via the Strait of Hormuz.

    This has had a knock-on impact for production in the country, where output from many major oil fields has had to stop or has been significantly lowered.

    One source said: “At the moment, Basra Oil Company is prioritising restoring production, where it is possible, from assets that have seen reductions in output.

    “They are using a lot of resources just to keep existing facilities online and restarting facilities that have stopped due to the crisis.

    “Commissioning a brand new project, like the Mishrif Qurainat facilities, is unlikely to be a priority until Iraq’s oil sector returns to a situation that is more like business as usual prior to the conflict with Iran.”

    Rumaila is the ‎second-largest producing field in the world, and it is estimated to have about 17 billion barrels of ‎recoverable oil remaining.‎

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17561830/main.jpg
    Wil Crisp