Saudi data center capacity projected to boom, but financing a challenge

Saudi Arabia's data center capacity is expected to grow significantly by 2030, reaching 1 gigawatt and becoming the fastest-growing market in the Gulf region. This surge in demand is driven by factors such as government requirements, data sovereignty laws, and the growing interest of hyperscalers in leasing data center space. The pipeline of announced projects is substantial, with PIF's HUMAIN alone planning to add over 6 gigawatts to the region's infrastructure over the next decade.

However, financing such expansion poses a major challenge. Alvarez & Marsal, a consulting firm, estimates that even half of this projected growth would require up to $32 billion in debt. This amount is likely to exceed the capacity of the kingdom's banks to collectively pool together. Kurt Davis Jr., the author of a report highlighting this issue, revealed to Semafor that "digital infrastructure is now one of the largest single sources of new project debt in our pipeline."

Despite these financing hurdles, the bullishness surrounding the sector remains strong. Institutional investors, such as KKR, have already begun to allocate capital to tech build-outs in the Gulf region. This injection of institutional money comes on the heels of a recent cyberattack on AWS sites in the UAE and Bahrain, which raised concerns about the future stability of the region's tech infrastructure.