PHOTO
According to RationalStat’s analysis, the Middle East & North Africa (MENA) data center is 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 2022 to 2028.
A data center is a place built in accordance with the unified standards that provide stable and reliable operating environments for centralized IT application systems with computing, storage, and information interaction capabilities. Data centers can be segmented into Captive, Colocation, and Infrastructure-as-a-Service (IaaS)/Cloud Data Centers. The MENA economy has faced a slowdown due to the COVID-19 (Novel Coronavirus) pandemic that has spread across the globe. The COVID-19 pandemic has caused cultural, political, and social changes not seen in decades, and the effect has already been experienced by the major sectors from finance to airlines. The COVID-19 spread has increased the data traffic significantly from March 2020 onwards. In order to provide high availability services to end-users, operators are taking precautionary measures for their on-site employees.
Notable Takeaways in the MENA Data Center Market:
- Globally, spending by end users on global data center infrastructure is projected to reach US$ 200 billion in 2022.
- MENA data center spending, including servers, network equipment, and storage to hit an estimated US$ 5-6 billion, up 3-5% percent from last year.
- RationalStat estimated data center spending to hover around 6-8% of overall ICT spending in MENA. In 2021, the overall ICT spending in Saudi Arabia was estimated to exceed US$ 38 billion. Meanwhile, the UAE's ICT spending is estimated to reach US$ 25 billion in 2021.
- Saudi Arabia and the UAE dominate the regional data center market on account of their government’s strategy to transform the economy. With aggressive investments by the regional governments in cloud computing, competitive business laws, and strong technological infrastructure, the ICT sector is forecast to continue expanding in the years ahead.
Middle Eastern countries are working towards digital transformation to attract foreign investments. 5G network deployment fuels the digital transformation, IoT, smart cities, and the fourth industrial revolution. In MENA, the number of mobile internet users exceeded 300 million in 2021, with penetration due to reach 50% of the population by the end of 2022. The GCC Arab states are home to the highest concentration of mobile internet users. Additionally, increasing user engagement with bandwidth-hungry applications such as video will lead to a surge in data consumption across the region, growing by 400% between 2022 and 2028.
Furthermore, the rapid investments in the data center are a key metric to the rising demand for cloud services in the MENA region. With large corporations like IBM, and Microsoft setting their offices in the region, the cost is further going to reduce along with better personalization of services and hence higher revenue generation. In a nutshell, the data center market is mainly driven by;
- Increasing investment by private and public entities coupled with the rising need for data storage capacity.
- 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.
-Ends-
Source: https://store.rationalstat.com/store/middle-east-north-africa-data-center-market-analysis-forecast/