Saudi Arabia Data Center Colocation Market: Enterprise Outsourcing, Secure Infrastructure & Cost Optimization

According to IMARC Group's latest research publication, Saudi Arabia data center colocation market size reached USD 674.8 Million in 2025. The market is projected to reach USD 1,769.2 Million by 2034, exhibiting a growth rate of 11.31% during 2026-2034.

How AI is Reshaping the Future of Saudi Arabia Data Center Colocation Market

• AI-Driven Cooling Optimization: Advanced AI systems monitor thermal patterns and automatically adjust cooling mechanisms, achieving power usage effectiveness (PUE) close to 1.0—matching northern European standards despite desert conditions through liquid and hybrid cooling technologies.
• Predictive Infrastructure Management: Machine learning algorithms analyze equipment performance data across power systems, networking gear, and cooling units, predicting failures weeks ahead and enabling proactive maintenance that cuts downtime by 25% across colocation facilities.
• Intelligent Power Distribution: AI-powered energy management platforms optimize electricity consumption across racks, dynamically allocating power based on real-time workload demands, reducing operational costs and supporting renewable energy integration for hyperscale operators and cloud providers.
• Automated Security Systems: AI-enabled cybersecurity platforms provide 24/7 threat detection and zero-trust security models, protecting sensitive data for BFSI and government sectors while ensuring compliance with Kingdom's data localization and sovereignty requirements.
• Smart Capacity Planning: Advanced analytics forecast data center demand by analyzing cloud adoption trends, AI workload growth, and IoT expansion, enabling colocation providers to optimize space allocation and infrastructure investments across Riyadh, Jeddah, and NEOM developments.

How Vision 2030 is Revolutionizing Saudi Arabia Data Center Colocation Industry

Vision 2030 is fundamentally reshaping the colocation landscape through massive digital infrastructure investments and economic diversification initiatives. The government unveiled the National Data Center Strategy in June 2025, targeting 1.5 gigawatts of capacity by 2030—one of the Middle East's largest planned builds. The Saudi Data and AI Authority launched the Hexagon Data Center in Riyadh with 480 megawatts capacity, covering over 30 million square feet as the world's largest government facility rated Tier IV. Major projects include NEOM and DataVolt's $5 billion AI factory in Oxagon powered entirely by renewable energy, operational by 2028. HUMAIN is coordinating projects targeting 6% of global AI workload with planned capacity near Riyadh and Dammam reaching 6.6 gigawatts by 2034. The Kingdom allocated over $10 billion toward data center projects across multiple cities, while public cloud spending is expected to hit $2.5 billion by 2026. With IT capacity currently at 222 megawatts and plans for 760 megawatts more, the market is projected to grow 29% annually through 2030.

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Saudi Arabia Data Center Colocation Market Trends & Drivers:

The market is surging due to unprecedented government infrastructure commitments and digital transformation programs under Vision 2030. The Ministry of Communications and Information Technology, working with SDAIA, is driving data sovereignty through localization requirements that mandate sensitive data hosting within Kingdom borders. SDAIA's strategy targets over SAR 10 billion in total local economic impact and annual savings exceeding SAR 1.8 billion from government data centers. In November 2025, HUMAIN and DataVolt partnered to build multi-gigawatt facilities combining end-to-end AI expertise with sustainable infrastructure. Al Moammar Information Systems struck a deal with Saudi Data Centre Fund 1 to provide 112 megawatts additional capacity. DataVolt secured land lease with MODON in February 2025 for an AI-ready facility on 55,000 square meters in Riyadh's First Technology Park. Desert Dragon Data Centers launched a $1.9 billion investment for 187 megawatts across Riyadh, Jeddah, Dammam and NEOM through joint venture with China Mobile International, with the first 65-megawatt Tier III facility operational by March 2026.

Smart city mega-projects and AI adoption are creating explosive demand for high-performance computing infrastructure. NEOM received $500 billion allocation featuring advanced AI-powered services, autonomous transportation, and fully renewable energy systems. The Line, Red Sea Project, and Qiddiya are being built with digital-first strategies requiring massive data processing capabilities. Microsoft and the Ministry of Communications established a Centre of Excellence for AI and cloud computing advancement. Internet users in e-commerce activities reached 33.6 million, while internet penetration hit 36.84 million users driving data consumption. Over 90% of government services have been digitized through platforms like Absher and Tawakkalna, generating vast data volumes requiring secure colocation. The National Strategy for Data and AI aims to attract $20 billion in AI investments and train 20,000 specialists by 2030. AirTrunk, backed by Blackstone, is investing $3 billion for hyperscale campus optimized for AI and cloud workloads in Riyadh, while Sahayeb Data Park phases are delivering new capacity through late 2025 into early 2026.

Enterprise cloud migration and outsourcing trends are accelerating colocation adoption across sectors. Small and medium enterprises prefer retail colocation's cost-efficient cabinet solutions over building private facilities, while large corporations and hyperscalers lease wholesale space for economies of scale. Pure Data Centers announced collaboration with Dune Vaults for hyperscale campuses exceeding 100 megawatts IT capacity. The Kingdom ranks among top countries in 5G deployment, with robust fiber-optic networks supporting high-speed connectivity. Jeddah's strategic Red Sea location serves as key subsea cable landing point with Center3 heavily involved in landing stations. DataVolt in October 2024 signed MoU with Center3 for maintenance and operational services across Kingdom facilities. Energy sector demand remains strong as IT capacity concentrates in Riyadh as economic hub and Dammam transforming from oil to digital economy. Renewable energy push includes gigawatt-level solar projects making sustainability central to colocation strategy, with facilities achieving LEED Gold standards and leveraging green hydrogen from the $9 billion plant producing 600 tons daily, 80% complete and commissioning in 2027.

Saudi Arabia Data Center Colocation Market Industry Segmentation:

The report has segmented the market into the following categories:

Type Insights:

• Retail Colocation
• Wholesale Colocation

Organization Size Insights:

• Small and Medium Enterprises
• Large Enterprises

End Use Industry Insights:

• BFSI
• Manufacturing
• IT and Telecom
• Energy
• Healthcare
• Government
• Retail
• Education

• Entertainment and Media
• Others

Regional Insights:

• Northern and Central Region
• Western Region
• Eastern Region
• Southern Region

Competitive Landscape:

The competitive landscape of the industry has also been examined along with the profiles of the key players.

Recent News and Developments in Saudi Arabia Data Center Colocation Market

• January 2025: NEOM and DataVolt signed landmark agreement for large-scale sustainable data center in Oxagon with $5 billion initial investment and 1.5-gigawatt capacity, running entirely on renewable energy with advanced cooling technologies targeting net-zero emissions, operational by 2028.
• February 2025: DataVolt secured land lease with Saudi Authority for Industrial Cities (MODON) to develop AI-ready data center on 55,000 square meter plot in Riyadh's First Technology Park, incorporating energy-efficient technologies and circular economy principles as part of $5 billion investment in Kingdom's digital infrastructure.
• June 2025: Saudi Ministry of Communications and Information Technology unveiled National Data Center Strategy targeting up to 1.5 gigawatts capacity by 2030, promoting regional AI model development and sovereign data hosting aligned with Vision 2030 digital transformation goals.
• July 2025: Al Moammar Information Systems Company (MIS) struck deal with Saudi Data Centre Fund 1 to provide additional 112 megawatts of data center capacity, supporting infrastructure and housing projects across the Kingdom.
• October 2024: DataVolt signed MoU with Center3 to provide maintenance and operational services for data centers in Saudi Arabia, utilizing combined expertise to boost reliability, efficiency, and innovation in data center management.
• November 2024: Pure Data Centers announced strategic collaboration with Dune Vaults for development of hyperscale data center campuses in Saudi Arabia with IT capacity exceeding 100 megawatts, serving cloud services and scalable infrastructure needs.

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