THE FUTURE OF DATA CENTRES IN THE GULF COOPERATION COUNCIL

1. What are the key opportunities and strategic drivers for data center development across the Gulf Cooperation Council (GCC)?

The GCC is experiencing unprecedented momentum in data center development, driven by ambitious national transformation programmes and significant strategic advantages. Saudi Arabia's Vision 2030 has targeted over $18bn in data centre investments, for significant capacity expansion by 2030 including facilities powered fully by renewable energy.  The United Arab Emirates (UAE) continues to lead with projects like G42's $20bnStargate UAE initiative - a 5GW AI-focused hyperscale facility partnering with OpenAI, Nvidia, and Oracle, representing OpenAI's first international site.

Qatar's Digital Agenda 2030 emphasises digital infrastructure as a cornerstone of economic diversification, while Oman has strategically positioned itself as a neutral digital transit hub, leveraging its location at major undersea cable intersections through partnerships with Equinix and Omantel. 

Taken as a whole, the region’s attraction to investors comes through most clearly on these three points:

• Critical Cost Advantages: The region offers compelling economic fundamentals, particularly energy costs 30-50% lower than global averages providing major cost  savings for energy-intensive data center operations. This cost advantage, combined with land availability and government incentives including tax breaks, fast-track approvals, and land grants, creates a unique investment environment.
• Digital Sovereignty Imperatives: Strict data localisation requirements in Saudi Arabia and the UAE mandate sensitive data storage within national borders, creating captive demand for domestic infrastructure. These sovereignty-driven regulations compel multinational corporations to establish local hosting capabilities, generating predictable revenue streams for data center operators while advancing national strategic objectives of data control and security.
• AI and Cloud Computing Surge: The AI market across the GCC is projected to grow significantly and this, in turn, is also expected to increase public cloud spending at 11% annually through 2029. This surge in demand, coupled with hyperscale developments from Amazon, Microsoft, Oracle, and Huawei totalling approximately $10bn in regional investments, demonstrates the market's robust fundamentals and long-term growth trajectory.

2. How are GCC governments addressing regulatory frameworks and infrastructure enablement for data center growth?

GCC governments have implemented significant regulatory architectures specifically designed to accelerate data center development.

• In, Saudi Arabia, Data Center Services Regulations were issued in 2023 and were designed to streamline the development and operation of data centers. These require all data center operators to register with the Communications, Space, and Technology Commission (CST). The CST had previously also issued the Cloud Computing Services Provisioning Regulations which categorise data center providers based on the sensitivity of data they are permitted to handle. Alongside these is the Personal Data Protection Law  , creating compliance pathways for operators while enforcing data residency requirements. 
• In September 2019, the UAE Telecommunications Regulatory Authority issued a directive to regulate the provision of dual connectivity at data centers in the country, to mitigate the risks of disconnection. Among its provisions are obligations on the UAE’s two telecommunications service providers, Etisalat and Du to provide network support services to data centers where required.
• Qatar's Digital Government Strategy 2023-2025 outlines streamlined digital infrastructure approvals, complemented by the National Digital Authentication and Trust Services Strategy for 2024 to 2026. Oman issued in September 2024 Ministerial Decision No. 1152/2/19/2024-20 regulating cloud computing services and data centers. These regulations set clear standards for the handling of data, information security and compliance requirements. It has however, also introduced some operational challenges around data localisation and operational transparency including approvals for transfer of sensitive data outside Oman.
• Sustainability and ESG Integration: Regulatory frameworks increasingly incorporate ESG requirements. The UAE mandates sustainability benchmarks for large data centers, while Saudi Arabia's NEOM AI-data center is expected to operate entirely on renewable energy. Qatar's National Vision 2030 emphasises environmental sustainability, and Oman's regulations increasingly incorporate green technology requirements, setting regional standards for environmentally compliant digital infrastructure.

Governments have shown a clear willingness to directly fund critical infrastructure development which should encourage investors eyeing the region. 

3. What additional measures could accelerate data center industry competitiveness and sustainable growth in the GCC?

While the GCC has established strong foundations, several strategic enhancements, we believe these four steps could further accelerate industry development and boost regional competitiveness.

• Regional Integration and Resilience: Implementing a "GCC Data Grid" - an interconnected fibre and storage backbone across member states - could create regional redundancy, enhance collective cybersecurity resilience, and facilitate cross-border data flows within the GCC customs union. This infrastructure would enable seamless failover capabilities and position the region as a unified digital economic zone, similar to the EU's digital single market approach.
• Advanced Technology and Innovation Hubs: Establishing government-backed data center research institutes focused on arid-climate technologies, advanced cooling systems, and renewable energy integration could position the GCC as a global leader in sustainable data center innovation. Creating specialised economic zones with streamlined regulations, guaranteed power allocations, enhanced security clearances, and integrated telecommunications infrastructure would provide turnkey development environments for international investors.
• Enhanced Dispute Resolution and Legal Infrastructure: Given the complex multi-stakeholder disputes emerging in data center construction and operations, establishing specialised technology / data center arbitration panels within existing regional arbitration centers (DIAC, SCCA, QICCA, ArbitrateAD) could provide expert resolution for technology integration, performance, and compliance disputes. For example, the DIFC Court’s Digital Economy Court was created to resolve disputes pertaining to new technologies including data centers.
• Regulatory Harmonisation and Cross-Border Facilitation: Developing unified GCC data center standards and mutual recognition agreements for licensing and compliance would reduce regulatory complexity for regional operators. Creating cross-border data flow agreements within the GCC framework could facilitate regional data processing while maintaining sovereignty requirements, similar to adequacy decisions under GDPR.

The GCC region stands at the forefront of a global digital transformation, with data center development serving as both an economic catalyst and strategic imperative. The combination of favourable regulatory frameworks, significant government investment, compelling cost advantages, and robust dispute resolution mechanisms positions the region as a premier destination for data center investment. As the region continues to attract international investment and develop domestic capabilities, the intersection of technology, regulation, and commercial law will create both opportunities and challenges requiring specialised legal expertise and proactive risk management strategies.