Saudi Arabia is undergoing a remarkable transformation, positioning itself as a global digital powerhouse. At the heart of this shift is the rapid expansion of Saudi data centres, driven by the Kingdom’s ambitious plans to digitize its economy and establish itself as a hub for artificial intelligence (AI) and innovation. For business leaders and executives eyeing growth in the region, this surge in data center infrastructure offers a wealth of opportunities and an added incentive to consider market entry.
The Kingdom’s efforts to diversify its economy are no secret, but its focus on technology is accelerating at an unprecedented pace. According to real estate services firm JLL, Riyadh is set to become the leading market for data center growth in the Middle East over the next three years. While the UAE currently holds the edge in capacity, Saudi Arabia is catching up fast. JLL predicts that the Saudi capital will see its data center footprint, measured in megawatts, grow by a staggering compound annual growth rate of 37% through 2027, nearly double the forecasts for Dubai and Abu Dhabi and well above the global average of 15%.
This growth isn’t happening in isolation. Across the Middle East, the data center market is currently valued at approximately $6 billion, and Saudi Arabia’s investments are rapidly increasing this number. The Kingdom is attracting global tech giants like Microsoft, Amazon Web Services (AWS), and Equinix, alongside innovative startups like Groq Inc., which has partnered with Aramco on an AI inferencing center. These developments signal a clear message to business leaders: Saudi Arabia is open for tech-driven business, and now is the time to act.
What makes Saudi Arabia such an attractive destination for data center investment? Several factors stand out, each offering practical benefits for executives considering business setup in the region.
Positioned at the crossroads of Europe, Asia, and Africa, Saudi Arabia offers a strategic advantage for hyperscale data centres and AI infrastructure. This geographic edge enables companies to serve a vast, interconnected market, making it an ideal base for tech firms looking to expand their reach.
The Kingdom’s access to abundant energy resources, particularly renewables, supports cost-efficient and sustainable data center operations. As sustainability becomes a priority for global businesses, this advantage aligns with corporate goals while keeping operational costs competitive—a critical consideration for executives planning long-term growth.
Saudi Arabia’s government is doubling down on its tech ambitions through initiatives like the Public Investment Fund (PIF) and private-sector collaborations. These efforts are accelerating investments in Saudi data centres, with Infrastructure and hosting a key focus for Invest Saudi. The goal? Increase capacity to over 1,000MW by 2030, backed by expected investments exceeding $11 billion. For foreign-owned businesses, this creates a welcoming environment ripe with incentives to establish a presence.
The scale of investment in Saudi data centres is nothing short of transformative. Global technology leaders and regional innovators are committing billions to projects that underscore the Kingdom’s potential. Equinix, for instance, is investing $1 billion in a 100MW data centre to meet hyperscale and enterprise demand. Meanwhile, DataVolt is developing a 1.5GW fully sustainable data centre campus in NEOM as part of a $5 billion expansion. Microsoft and AWS are also rolling out cloud regions set to launch by 2026, while Tencent Cloud has committed $150 million to its first Middle East cloud region.
These aren’t just infrastructure projects, they’re signals of confidence in Saudi Arabia’s tech ecosystem. Companies like Zoom, partnering with center3 to deploy the country’s first Zoom node via Oracle Cloud in Riyadh, and KKR, collaborating with Gulf Data Hub on a $5 billion+ hyperscale expansion, highlight the diversity of opportunities. For business leaders, this influx of activity translates into a growing demand for services, talent, and partnerships, all of which require a solid foundation through company formation and regulatory compliance.
Saudi Arabia’s data center boom isn’t just about infrastructure, it’s deeply tied to the Kingdom’s broader vision. Data Sovereignty Laws are a key driver, ensuring that sensitive information remains within the country’s borders. This aligns with the government’s ambition to position Saudi Arabia as a regional and global tech hub, a goal that resonates with executives seeking stability and compliance in their market entry strategies.
As hundreds of companies establish new headquarters in Riyadh, the demand for data processing and storage is skyrocketing. This surge creates a ripple effect, opening doors for tech businesses, whether they’re providing cloud services, AI solutions, or enterprise software to capitalize on the Kingdom’s growth.
The growth of Saudi data centres is more than a trend—it’s a cornerstone of the Kingdom’s journey toward becoming a global tech leader. As Riyadh solidifies its position as the Middle East’s data hub, executives have a chance to position their companies at the forefront of this transformation. The influx of investment and infrastructure creates demand for a wide range of services, from software development to cybersecurity, all of which require a foothold in the Kingdom.
As the Kingdom races to build its cloud infrastructure and AI capabilities, those who establish a presence today will be best positioned to shape its digital tomorrow. For foreign-owned businesses, the government’s push to increase data center capacity to over 1,000MW by 2030 signals long-term potential. Pairing this with Peninsula’s expertise in business setup allows you to enter the market with confidence, tapping into a digital economy that’s poised for explosive growth.
For executives eager to seize these opportunities, navigating the Saudi business landscape can feel daunting. Local regulations, licensing requirements, and partnership structures require expertise to ensure a smooth business setup. This is where Peninsula steps in.
We have supported entrepreneurs, SMEs, and multinational corporations entering and expanding in Saudi Arabia. With a team of experts who possess deep knowledge of local procedures, Peninsula has earned the trust of companies including Amazon and Best Western to manage their company formation in the Kingdom. Our approach combines regulatory mastery with practical business acumen, streamlining every step, from commercial registration to entity formation and local partnerships.
The rise of Saudi data centres brings unique considerations for tech businesses. Whether you’re a startup partnering with a hyperscale provider or a multinational launching a cloud region, Peninsula’s expertise ensures your business is structured effectively. Our trusted team of advisors understand the nuances of Saudi Arabia’s evolving tech ecosystem, from compliance with Data Sovereignty Laws to leveraging government incentives, making your market entry seamless and strategic.
Alistair Paine brings 15 years of dedicated experience in Saudi market entry, guiding Fortune 500 companies and innovative scale-ups through successful establishment in the Kingdom. His expertise in Saudi company formation, licensing and market entry strategy, positions him as a leading authority and consultant in international business expansion to Saudi Arabia.
Schedule a free consultation with Alistair and the Peninsula team to understand which Saudi market entry strategy is best suited to your business.
Email: Alistair@peninsulacs.com
