UAE Data Centre Colocation Market Poised for Rapid Growth — Forecast to Reach USD ~1.74 Billion by 2030
The colocation segment of the data-centre market in the United Arab Emirates is set for a major leap forward. According to a report by Arizton Advisory & Intelligence, the market was valued at approximately USD 448 million in 2024 and is projected to expand to around USD 1.736 billion (≈ USD 1.74 billion) by 2030, representing a compound annual growth rate (CAGR) of about 25.3 % over the period.
Key Drivers
- Hyperscale cloud growth – Major global cloud providers (such as Amazon Web Services, Microsoft Azure, Oracle Corporation and Alibaba Cloud) are expanding their operations in the UAE, increasing demand for colocation space.
- Smart-city & 5G infrastructure – With large-scale roll-outs of 5G, Internet of Things (IoT) and smart-city initiatives in Abu Dhabi and Dubai, data-traffic volumes and low-latency requirements are rising, which boosts colocation demand.
- Digital-infrastructure build-out – The UAE hosts around 34 existing colocation/data-centre facilities and about 23 upcoming ones, signalling readiness to scale.
- Regional gateway role – The UAE’s geographic and regulatory advantages (free zones, global connectivity via cable systems, power and cooling infrastructure) make it attractive for regional data-centre hubs.
Market Structure & Supply Dynamics
The 2025-2030 report highlights that the collocation segment will increasingly favour higher-density builds, and white-floor area utilisation is expected to grow significantly. For example, by 2030 the market is forecast to reach 6.12 million sq ft of utilised white-floor area and 1,510 MW of IT power capacity across the country. Major operators active in the market include Khazna Data Centers, Gulf Data Hub, Equinix (Middle East operations), plus newer entrants such as Pure Data Centres Group and XDS DATACENTRES.
Strategic Implications
- For investors & developers: The steep projected growth (CAGR ≈ 25 %) offers strong rationale for new builds and expansion in the UAE. Sites offering hyperscale-ready infrastructure, low-latency connectivity, and sustainability credentials will likely command premium interest.
- For cloud and enterprise users: The rise in local colocation capacity offers more options for latency-sensitive workloads, compliance (data-residency), and disaster-recovery setups within the region, reducing reliance on far-flung mega-centres.
- For the UAE economy and policy makers: Establishing the UAE as a major data-centre hub helps deepen the digital economy, create skilled jobs, and strengthen the country’s position in regional technology value-chains.
Risks & Considerations
- Power / cooling constraints: High-density colocation racks (e.g., 50 kW+ per rack) demand robust power and cooling infrastructure — any delay or cost escalation may blunt growth.
- Regulatory / compliance risk: Local rules on data-localisation, energy usage, and hyperscale facility approvals require attention.
- Global macro factors: A slowdown in global cloud-spend or a major shift in hyperscale operator strategy could impact the forecast.
- Execution risk: Projection assumes all upcoming data centres, planned white-floor area and IT power capacity come online in a timely manner — delays or cost overruns could dampen actual outcomes.
Outlook
If the forecast holds true, the UAE will more than triple its colocation market within six years (2024–2030). Given the pace of smart-city deployment, rising cloud usage, AI/ML workloads, and regional connectivity ambitions, the country appears on track. Stakeholders should monitor which operators secure major leases, how power & cooling systems scale, and how secondary emirates (Sharjah, Ajman, Fujairah) factor into the next wave of growth.
