According to RationalStat’s analysis, the Middle East & North Africa (MENA) data center was estimated at US$ 3.4 billion in 2022 and is expected to reach US$ 10.4 billion by 2028, growing at a CAGR of 20.4% from 2023 to 2028.

The term "data center" refers to a facility constructed in line with unifying standards that offer solid and reliable operating environments for central IT applications with storage, computing and information interaction capabilities. Data centers can be segmented into Captive, Colocation, and Infrastructure-as-a-Service (IaaS)/Cloud Data Centers. It is true that the MENA economy has been experiencing an economic slowdown because of COVID-19 (Novel Coronavirus) pandemic, which has spread globally. The COVID-19 pandemic has triggered political, cultural, and social shifts that have not been seen in many years. The impact has been felt by major industries from airlines to finance.The COVID-19 spread has increased the data traffic significantly from March 2020 onwards. To provide high-availability services to users, operators are taking preventive measures to protect their workers on site.

Notable Takeaways from the MENA Data Center Market:

• Globally, the amount spent by customers on infrastructure for data centers was predicted to be around US$200 billion in 2022. 
• MENA data center expenditures which includes server, networking equipment and storage, to reach the estimated US$5-6 billion, increasing by 3-5% over the previous year.
• RationalStat estimates data center spending to be around 6-8%of total ICT investment in MENA. In 2021, overall ICT investment on Saudi Arabia was estimated to surpass US$ 38 billion. The United Arab Emirates' ICT spending is projected to be at US$ 25 billion by 2021.
• Saudi Arabia and the UAE dominate the regional data centers market on account oftheir government's strategy to transform their economies. With the strong investments of the governments of the region into cloud computing legal frameworks for business, and a robust technological infrastructure and infrastructure, the ICT sector is predicted to grow over the next few years.

Middle Eastern countries are working toward digital transformation in order to attract foreign investment. 5G networks are a key driver for digital transformation IoT and smart cities as well as the 4th industrial revolution. In MENA the amount of users using mobile internet increased to 300 million in 2021. The penetration is expected to be 50% of the population at the end of 2022. In the GCC Arab states have the largest number of internet users on mobile devices. In addition, the growing engagement of users using bandwidth-intensive applications like video will result in an increase in data consumption across the region, which will increase by 400% between 2022-2028.

In addition, the swift investments in data centers are an important metric for the growing demand for cloud-based services within the MENA region. With major corporations such as IBM and Microsoft having their headquarters within the area, price will also decrease as well as better personalization of services and consequently, more revenue. In short the market for data centers is driven by

• The increasing investment of private and public organizations with the growing need to store data.
• The growing demand for cloud computing, big data, and IoT technologies will be a major driver for Infrastructure-as-a-Service (IaaS) over the forecast period.

Costs and Pricings of Data Center

The cost of the data center varies considerably depending upon the location and labor. Backup power installations are also added (for example, industrial power battery backup and diesel generator). On network connectivity, the end user needs multiple internet providers and dedicated fiber optic connections. A mile of fiber optic connection can cost up to US$ 250,000.

A significant drop of more than 11% is observed in the rental prices of a typical data center due to an increase in market consolidation and an increase in utilization rates. The typical cost of data centers based on their type is TIER I - 11,500 US$/KW, TIER II 12,500 US$/KW, TIER III 23,000 US$/KW, and TIER IV 25,000 US$/KW.

Challenges impacting the growth of data centers across the region:

• Cybercrime and fraudulent activities
• Migration from the pre-established Legacy system leads to downtime and lower profitability for a period
• Companies feel reluctant to shift their infrastructure to the cloud
• There is not enough awareness pertaining to the regulatory impact in regards to cloud infrastructure
• Political conflict in MENA with a history of violence and war escalation

Regional Snapshots

• GCC: The GCC data center market is estimated at US$ 1.362.6 million in 2022 and is expected to reach US$ 5,238.3 million by 2028, registering a CAGR of 20.8% during 2022-2028. The data center market is primarily driven by increasing investment and the growing cloud computing market. The cloud market is becoming more competitive in the region, especially in the UAE. The increasing adoption of cloud computing services is leading to the growth of retail and wholesale colocation services in the region.
• Turkey:The market for data centers in Turkey is driven by the development of facilities and soaring demand for cloud computing solutions. Istanbul is one of the major data center markets in Turkey and other Middle Eastern countries.
• Rest of the Middle East: including Israel and Iraq is estimated at US$ 544.1 million in 2022 and expected to register a CAGR of 22.3% during 2022-2028.
• North Africa:The regional market is fueled by the increased focus of government and private stakeholders on the development of data centers and accelerating cloud computing services. Countries including Egypt, Morocco, Algeria, etc. are expected to reach a market value of US$ 1.2 billion by the end of 2028.

Leading companies across the globe are seeking a significant foothold in the regional and domestic Middle East and North Africa markets with targeted and customized data center solutions. Some of the leading companies operating in the region include IBM Corporation, Oracle Corporation, KKB Anadolu Veri Merkezi, Turk Telekom International, Huawei, Microsoft Corporation, Telehouse, Equinix, NTT Communication, etc.

Source: https://store.rationalstat.com/store/middle-east-north-africa-data-center-market-analysis-forecast/

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