Saudi Arabia Eyes $12.8 Bn to Build Data Centre

Saudi Arabia is in discussions to develop a massive data centre at Oxagon, with an estimated investment of $12.8 billion. Oxagon is a key part of the futuristic NEOM city being built in the Tabuk Province, launched in 2017. 

The planned facility would feature 1 gigawatt of capacity, marking a step forward in the country’s push to strengthen its digital infrastructure. This project is part of a bigger investment in Saudi Arabia’s data economy, as announced by Ali Raza, chief investment officer at Saudi Arabia Holding Co. 

Other notable initiatives include Pure Data Centres Group and Dune Vaults, which target a similar 1GW capacity, and DataVolt’s $5 billion collaboration with center3 to expand cloud and data storage solutions.  

Meanwhile, ServiceNow has invested $500 million in a regional HQ in Riyadh and two data centres along with Zoho Corp, which spent $133 million to establish two more data centres in Riyadh and Jeddah.

The demand for data infrastructure in the region is set to grow exponentially, driven by factors like 5G coverage and increasing data traffic. 

“With over 50% of the kingdom covered and growing, 5G will power bandwidth-heavy applications like AR/VR, autonomous vehicles, and IoT systems,” says Taimoor Ahmed Chaudhary, business manager for Islamic banking at Allied Bank Limited.

“This investment is a game-changer not just for the kingdom but for the entire Middle East,” said Sujitha Kurup, co-founder at Inovays.

According to estimates, data traffic per smartphone in Saudi Arabia will increase from 5GB in 2023 to 18.7GB by 2029, further driving the need for high-capacity data centres. 

Gaming and esports also represent a growing segment, with a $500 million esports city currently in the planning stages.  

The Saudi government’s ongoing investment in IoT and edge computing technologies will also drive further demand. Companies like iot squared are working proactively to integrate these solutions into major infrastructure projects.  

Other global tech giants are also making significant investments in the kingdom. Oracle is expanding its cloud presence with a $1.5 billion investment in Riyadh, while Amazon Web Services (AWS) is committing $5.3 billion to boost its regional infrastructure.  

IBM also established a $250 million software lab in Riyadh. Though it’s not directly a data centre, it is a significant investment in the Saudi data economy.

With these developments, Saudi Arabia is poised to become a regional leader in digital and cloud technologies, with major implications for its data economy and technological future.