2023-11-24-莱坊-Data_Centres_The_MENA_Report_Q3_2023_9页_3mb

Executive Summary

The MENA region is experiencing significant growth in its data centre market, driven by digital transformation, cloud adoption, government initiatives, and its strategic geographical location connecting Europe, Asia, and Africa. Key countries leading this growth include the UAE, Saudi Arabia, and Israel, which are rapidly expanding their capacity to become regional hubs. The expansion is fueled by increasing demands from sectors like e-commerce, AI, cybersecurity, and IoT, alongside investments in renewable energy and improved connectivity.

Despite high growth potential, challenges persist, including regulatory barriers, availability and cost of power, skilled labor shortages, and complex market entry requirements. Regional trends highlight the dominance of local operators in many markets, though opportunities for international players are increasing due to regulatory changes and government support.

Market Overview

The report is focused on the data centre landscape across the Middle East and North Africa, analyzing market trends, operators, growth drivers, and challenges within specific countries and the wider region. Data centres are seen as critical infrastructure for future economic diversification (e.g., Vision 2030 in Saudi Arabia) and digital adoption.

Country Specifics

1. UAE (United Arab Emirates):

   • Capacity: Significant growth (592MW live capacity, 235.3MW live in 2023). Dubai and Abu Dhabi are key hubs.
   • Growth Drivers: Government initiatives (tax incentives, regulatory frameworks), global connectivity ambitions, focus on sustainability (e.g., solar power), foreign investment opening up market.
   • Challenges: High market entry cost, availability/demand mismatch for power, regulatory hurdles easing but still present (foreign ownership limits).
   • Players: Khazna (major growth), Gulf Data Hub, Equinix, Microsoft, Morohub, Quantum Switch, UAE Cloud Providers (e.g. G42 Cloud).

2. Saudi Arabia:

   • Capacity: Fastest-growing market in MENA (109MW live capacity, 29.7% YoY growth). Major hubs: Riyadh, Jeddah, Dammam.
   • Growth Drivers: Vision 2030 (economy diversification), strategic location, improving connectivity (subsea cables, 5G rollout), public cloud demand, sovereign cloud initiatives.
   • Challenges: High cost of market entry, power tariffs, security costs, limited land plots, corporate social responsibility concerns (e.g., Saudi Arabia Human Rights Commission), restrictions on foreign ownership expected to ease.
   • Players: Gulf Data Hub (GDP-backed), Center3, Edgnex.

3. Israel:

   • Capacity: Third largest in MENA (281MW live capacity). Tel Aviv is the main hub.
   • Growth Drivers: Strong cybersecurity focus, history as an innovation hub (tech sector), strategic location, attracting international cloud providers (Google, AWS), government support ("Project Nimbus"). Strategic submarine cables (including soon, Blue cable).
   • Challenges: Power limitations (improving), land scarcity, regulatory hurdles to data sovereignty and privacy, competition for skilled labor, high cost for smaller operators.

4. Morocco:

   • Capacity: 65MW live capacity.
   • Growth Drivers: Development agency initiatives, focus on National Digital Strategy, geographic location (gateway between Africa and Europe), government support for private investment.
   • Challenges: Immature market in some aspects, regulatory environment complexity for foreign operators, competition for used equipment and land plots.
   • Players: N+ONE Datacenters (major US player), local operators. Support from African Infrastructure Investments Managers (AIIM).

5. Egypt:

   • Capacity: 154.7MW live capacity.
   • Growth Drivers: Communications sector development, government encouragement, significant investments from operators (Khazna, Gulf Data Hub, GPX Global, Elsewedy), improving connectivity.
   • Challenges: Still maturing market, relatively high internet penetration but slow speed improvement needed (US$4 billion investment suggested), power grid constraints are improving, regulatory complexity.

6. Lebanon:

   • Capacity: Very small (~2-3MW).
   • Growth Drivers: Political stability improving focus, need for digital infrastructure despite economic issues.
   • Challenges: Very small market, limited capacity by region, dominant operators are finance-focused, high internet costs due to lack of competition and infrastructure.

7. Other MENA Markets (Bahrain, Jordan, Kuwait, Oman, Qatar):

   • Capacity: Combined 8.6MW across markets.
   • Growth: Varying levels, driven by cloud initiatives, liberalization ("Cloud First" Bahrain), strategic importance, and aiming to be regional technology gateways.
   • Challenges: Common issues include lack of competition in internet services/telecom, limited infrastructure suitability, high connectivity prices, weak cybersecurity regulations and information protection laws.

Regional Trends & Common Growth Drivers

• Connectivity: Developed submarine cable infrastructure strengthening East-West connectivity.
• Cloud Computing: Public cloud demand significantly increasing (UAE: 79% of IT take-up in Q3 2023).
• E-commerce & Services: Digital payments and services driving infrastructure adoption (e.g., 2/3 annual growth in E-commerce).
• Government Initiatives: Policies supporting digitization, attracting ICT businesses, tax incentives, Vision 2030 type strategies.
• Renewable Energy: Increasing use of solar/wind to power data centres, driven by cost and commitment to renewables.
• AI & IoT: Technologically advanced centres (e.g., UAE, Israel) are positioning for AI growth. Estonia shows potential.
• Foreign Investment: Regulations are softening, allowing more international players into the market.

Market Challenges

• Regulation: Complex legal systems, varying ownership rules, evolving data privacy sovereignty requirements can hinder foreign expansion.
• Power/Infrastructure: Availability and cost of reliable power remain critical hurdles, though project timelines in the region are generally quicker than in developed markets.
• Skills Gap: Insufficient pool of specialized IT and engineering professionals for development and operation.
• Market Entry Thresholds: High minimum investment requirements, land acquisition difficulties, and regulations require strong financials and can deter smaller players.

Future Outlook

The MENA data centre market is poised for continued rapid expansion over the next 5-10 years, solidifying the region's position as a key player in the global digital infrastructure landscape. Regional cooperation and further government-private sector partnerships will likely be crucial enablers for achieving this potential.