Global shifts and the Middle East’s strategic ascent in building the backbone of a holistic digital decade

It is not long since data centers were a back office concern, invisible to anyone outside the world of IT procurement. In a few short years they have become a proxy for national competitiveness. Demand for large language models (LLM) and other analytics has boosted investment in chips, networking, and storage to the point where UBS analysts talk about a new ‘enabling layer’ of infrastructure.

The resulting strain on power grids is evident: projections suggest US data center electricity use could more than double, accounting for 8.6 percent of US demand for electricity ten years from now. The story today is not simply one of bigger buildings, but of more intelligent architecture, new geographies, and a race to scale without sacrificing reliability or sovereignty.

A turning point for design and deployment

One of the most striking shifts is the move toward modular construction. Industry researchers point out that factory-built modules enable operators to deliver capacity in months rather than years.

These modules can be replicated across regions, allowing a consistent and operational design whether a facility sits in northern Finland or central Saudi Arabia. The core aim is to scale at the pace of fast-growing demand, as pre-leasing rates reach up to 94.8 percent in top markets, to bring compute closer to users, and meet data-sovereignty requirements across all geographies and jurisdictions.

Another key factor is thermal management. The latest GPU clusters can require above 50kW per rack, pushing conventional air cooling to its limits. Innovations like the hybrid system deployed by DAMAC Digital in Riyadh show what is possible even in challenging climates.

By combining different cooling methods, including the adoption of adiabatic pre-cooling pads and R1234ze refrigerant-based chillers, the facility improved power usage efficiency from 1.45 to 1.37, therefore enabling capacity for more servers.

The Middle East as a key emerging market for data centers

The geographic map of data center development is also changing. Investors that once concentrated on the FLAP markets – Frankfurt, London, Amsterdam and Paris – now see Riyadh, Jeddah, Abu Dhabi, and Dubai as strategic locations.

The Middle East’s data center capacity is expected to triple from 1GW in 2025 to 3.3GW over the next five years as regulatory incentives attract investment. Saudi Arabia’s Vision 2030, for instance, projects a diversified digital economy in which building modern data centers is an essential element. The Cloud Computing Special Economic Zones established in the country is a testament to such ambition.

The UAE is pursuing a parallel trajectory through its Digital Economy Strategy and National Artificial Intelligence Strategy 2031, which together seek to sharply increase the digital economy’s share of GDP, underpinned by Dubai’s strategic vision for an AI-powered data center economy which will make the emirate a world-leading destination for sustainable, AI-ready facilities.

Equally important is the growing pool of regional developers with global experience, which are able to thrive in a favourable market environment due to advantages such as accessible land costs and power affordability, accompanied by forward-looking government policies. As an example, cost of power in the region ranges between USD 0.05 to USD 0.06 per KWh, while in the US it ranges from USD 0.09 to USD 0.15 per KWh.

DAMAC Digital is a useful case in point. As the digital infrastructure arm of a large and multi- sectorial UAE-based global conglomerate, it has 25 projects across USA, Europe, the Middle East, Asia, and Africa with over 4GW of IT load under development or secured pipeline. The strategic decision to adopt modular construction has reduced build times and allowed rigorous and consistent delivery quality across disparate markets.

Recent acquisitions have added to DAMAC Digital’s capabilities: the purchase of Finland-based Hyperco in 2025 gives the company a foothold in the Nordic region, known for its low-carbon energy and mature connectivity. A separate pledge by DAMAC Digital, earlier this year, to invest in data centers across the US underscores how Middle Eastern capital is now shaping global supply.

What comes next

Looking ahead to 2026, three themes stand out. First, greater autonomy within facilities. AI-powered, real-time maintenance and intelligent workload management will increasingly be built into the fabric of operations. These tools will help operators maintain uptime and optimize energy use without constant human oversight.

Second, cooling innovation will accelerate. Hybrid solutions will help facilities in hot climates, such as in the Middle East, remain efficient.

Finally, the debate over data sovereignty will intensify as private sector customers and states insist on local storage and processing. Developers that can offer secure, sovereign infrastructure and have access to capital for further innovation, while still partnering with global cloud providers, will be well placed.

Towards an agile locally rooted and global perspective

Henceforth, this decade’s momentum sets the stage for an industry defined not just by megawatts but by intellectual agility. Designing for high-density racks in complex climates requires as much ingenuity as balancing sovereign data rules with the demands of global cloud markets.

The Middle East’s experience, combining plentiful land and energy, supportive regulation and access to capital, illustrates the benefits of aligning national ambitions with private sector innovation.

As next-generation computing platforms emerge and data-sovereignty debates intensify, the winners will be those who can fuse local insight with global reach, building resilient infrastructure that serves a digital economy far more diverse than any single geographic hub.

Industry leadership will be measured less by the size of a single facility than by the ability to articulate a cohesive strategy for the age of omnipresent and holistic compute.