Outlook 2025: The Middle East Data Centre Market is Poised for Substantial Growth

Tassos Peppas, the Regional Director for Middle East, Turkey, and Central Asia, at Vertiv, says the regional data centre market is expected to reach $9.61 billion by 2029, growing at a CAGR of 9.52%

How did the industry and your company fare in 2024, and what were the key highlights?
In 2024, the data centre industry witnessed remarkable growth, fueled by the rising demand for artificial intelligence (AI) and high-density computing (HDC) applications. Globally, we saw a surge in investments, particularly in North America, the Nordics, and the Middle East, where factors such as power and land availability made these regions highly attractive.

For the Middle East specifically, the momentum has been incredible, driven by rapid advancements in AI adoption. While some countries have progressed faster than others, the overall trend reflects a strong commitment to embracing these upcoming technologies. From a technology perspective, the focus has been on advanced solutions that enable AI, such as liquid cooling systems, modular data centres, and intelligent high-density power distribution. However, balancing the traditional colocation space with the unique requirements of AI-driven applications remains a key challenge.

As for Vertiv, we’ve had an exceptional year. While Vertiv Middle East is riding on the AI wave, Vertiv’s global growth has been equally impressive. Based on Q3 results, we are growing at a rate of 14% year-on-year and with a 16% CAGR over the last 3 years. Locally, we’ve made significant strides, including opening our new regional headquarters in Saudi Arabia, exhibiting at GITEX Global Dubai with our dedicated booth, and hosting multiple AI Innovation Roadshows across the region. These efforts underscore our commitment to supporting the region’s digital transformation.

What opportunities do you foresee for 2025, and how do you plan to leverage them?
The Middle East data centre market is poised for substantial growth over the next five years. Projections indicate that the market, valued at USD 5.57 billion in 2023, is expected to reach USD 9.61 billion by 2029, growing at a CAGR of 9.52%. This expansion is driven by increased digitalisation, cloud adoption, and the rising demand for AI and high-density computing applications.

Saudi Arabia is emerging as a significant player in this landscape. The country’s data centre construction market is projected to register a CAGR of 17.55% during the forecast period, with the upcoming IT load capacity expected to reach 855 MW in six years. This growth is supported by substantial investments aimed at boosting data centre capacity four-fold to more than 1,000 MW over the next five years.

As a leader in AI infrastructure, Vertiv is well-positioned to spearhead this regional transformation. Our expertise in advanced technologies—such as liquid cooling, modular data centres, and intelligent high-density power distribution—aligns perfectly with the region’s evolving needs. We plan to leverage these strengths by collaborating with local partners, investing in regional talent, and tailoring our solutions to meet specific market demands.

Additionally, the trend towards retrofitting existing data centres and the development of both brownfield and greenfield deployments are gaining momentum in the Middle East. This is evident in Saudi Arabia’s ambitious plans to significantly expand its data centre capacity. Vertiv intends to capitalise on these opportunities by offering scalable and efficient solutions that facilitate seamless upgrades and new installations, ensuring our clients can meet the increasing demands of modern applications.

What major challenges did you encounter in 2024, and how did you address them?
In 2024, the Middle East region presented both exciting opportunities and significant challenges, particularly due to the rapid growth and technological advancements in the industry. This landscape requires a strategic approach to keep pace with demand while ensuring we stay ahead of the curve in terms of innovation.
One key strategy lies in expanding capacity to meet rising demands. Our robust growth projections are underpinned by meticulously planned capacity expansions, allowing us to remain agile and responsive to market dynamics. This proactive approach enables our objective of exceeding the expectations of our customers and stakeholders.

Equally, technology is at the core of everything we do. We have made a firm commitment to our investors and customers to elevate our R&D and capacity investment, with a planned incremental investment of ~$150M – $200M in 2025, as highlighted at our investor day [4]. This dedication underscores our mission to lead the way in innovation.

In addition to the demand surge, a significant challenge we faced was the transition from traditional data centres to AI-enabled infrastructures. Clients in the Middle East face the challenge of converting their existing installations to accommodate AI technologies due to the extremely high power density requirements. This transition poses both – technical and operational challenge. Vertiv has taken a leading role in assisting our clients by providing the expertise and support necessary to make this conversion smooth and effective.

Furthermore, the industry currently faces a knowledge gap around AI-enabled applications. To address this gap Vertiv has stepped up to educate and train data centre operators on AI-enabled infrastructure. We collaborated with industry leaders, including NVIDIA, to bring innovative technology to the region, empowering businesses to harness the benefits of AI in their operations.

Which emerging technologies do you believe will be in high demand in 2025, and why?
The demand for advanced technologies will continue to grow in 2025, driven primarily by the rapid expansion of AI applications and their unique requirements. AI workloads are exceptionally power- and cooling-intensive, which presents both opportunities and challenges for the data centre industry. One of the most critical emerging technologies will be power stabilisation solutions, including UPS systems, power distribution equipment, and switchgear designed to handle the unpredictable and “spiky” nature of AI workloads.

These workloads can fluctuate significantly, putting tremendous stress on electrical installations. Ensuring the safe and reliable operation of these systems will require infrastructure that supports higher power densities and dynamic load adjustments. Cooling technologies will also see a surge in demand, particularly liquid cooling solutions.

As compute-intensive workloads transition from CPU to GPU-based systems, the heat generated by modern chips with high thermal design points will necessitate innovative cooling approaches. Direct-to-chip cooling and chilled water CDU (cooling distribution units) are emerging as dominant technologies to efficiently manage extreme heat density and ensure sustainable operations. Hybrid cooling systems combining liquid-to-liquid, liquid-to-air, and liquid-to-refrigerant configurations will evolve, catering to both brownfield and greenfield deployments.

Energy-efficient solutions will become even more essential, as data centers face rising power demands and increasing regulatory scrutiny. With AI driving global data centre power consumption toward 3-4% of the world’s total electricity by 2030, organisations will prioritise energy alternatives like microgrids, fuel cells, and alternative battery chemistries. Additionally, the development of small modular reactors for data centres is a long-term trend worth monitoring.

Finally, integrated IT and infrastructure systems will gain momentum. Servers will increasingly be factory-integrated with cooling and power solutions, optimising manufacturing, deployment speed, energy efficiency, and footprint. Collaboration between chip developers, power and cooling manufacturers, and customers will accelerate the development of “AI Factories” with rack densities of 500 to 1000 kW or higher, transforming the traditional data centre landscape.

What will be your primary focus areas and strategic priorities for 2025?
For 2025, our primary focus areas and strategic priorities will continue to centre around education, talent development, technological innovation, and expanding our global and regional collaborations to support the rapid evolution of the industry. Vertiv will relentlessly focus on creating more educational programs, building on the success of our AI Roadshows, and launching similar initiatives to foster both external and internal talent development.

Internally, we are committed to attracting the top talent in the industry to address the growing demand for AI expertise. As AI deployments in the Middle East increase, our clients and operators will require a higher level of support and expertise, and Vertiv will ensure we are ready to meet these needs with the best talent.

In addition to this, Vertiv is ramping up globally to meet the growing demand for advanced infrastructure solutions. Our primary objective for 2025 is to bring the latest global technological advancements to the region, ensuring that cutting-edge innovations are readily accessible to our clients. Through our longstanding relationships with key players in the industry ecosystem—including prominent chip technology companies, leading hyperscalers, and co-location providers—we collaborate to shape the future of technology.

We place equal importance on our regional partnerships, which are essential in fostering a collaborative ecosystem that supports sustainable growth and innovation. The ongoing evolution of power and cooling infrastructure for modern data centres is a key area of focus. Data centres must be future-ready, designed to accommodate evolving IT demands over their 20-year lifecycle.

Vertiv’s innovations, such as the expanded Vertiv CoolChip CDU portfolio, including our latest 2.3-megawatt capacity unit, which offers the highest power density per square meter in the industry, are designed to meet these challenges. We will continue to enhance our liquid cooling solutions and support data centre retrofits with products like the Vertiv CoolChip CDU 330 liquid-to-air system, enabling seamless upgrades for improved efficiency.

On the thermal front, our Vertiv CoolPhase Flex product, developed in collaboration with a top client, demonstrates our commitment to customer-centric innovation. This solution minimises installation costs, optimises space usage, and offers integrated heat rejection, air cooling, and liquid cooling capabilities, enabling clients to dynamically adapt to thermal demands throughout the lifecycle of their data centres.

As rack densities continue to rise exponentially, Vertiv has developed the Vertiv PowerNexus product, which integrates UPS, power switchgear, and battery energy storage into a single, modular system. This innovation reduces installation costs, provides footprint efficiency, and delivers exceptional modularity to meet the needs of modern, high-density data centres.

We also recognise the industry’s shift toward higher levels of prefabrication to speed up infrastructure availability. Given that time is a critical competitive advantage for our customers, Vertiv is committed to advancing prefabrication technologies, which can reduce construction timelines by 30-50%. This approach not only accelerates project delivery but also improves quality control and simplifies operations, ensuring our clients achieve their goals more efficiently and with greater confidence.

Are there plans to explore new markets or introduce new products/applications to your portfolio in 2025?
In 2025, we are excited about the potential opportunities that AI will unlock across various industries beyond just data centres. While we can’t predict every detail, we foresee significant breakthroughs in sectors like healthcare, transportation, education, manufacturing, and telecommunications. These industries will undoubtedly create new markets for Vertiv, and we are preparing to meet their evolving needs with innovative solutions tailored to these sectors.

Vertiv continues to innovate with a strong focus on supporting high-density AI workloads. For example, we recently launched the 2.3 MW CDU, Vertiv CoolChip CDU 2300, which is designed to address the increasing power density requirements of AI-driven infrastructure. This solution has the industry’s highest CDU capacity per square foot, enabling operators to reduce cost and footprint by deploying fewer CDUs. This is just one example of how we are responding to the needs of the growing AI sector.