Dubai-based data center operator Khazna plans to expand into Saudi Arabia, targeting a 25% share of the market.

The company has identified two potential locations for data centers in the kingdom, where it will face competition from local firms and telecom providers.

This move aligns with Saudi Arabia’s new regulations requiring personal and financial data to be stored locally, prompting international companies like Amazon, Google, and Oracle to establish facilities there.

Khazna currently holds 71% of the UAE’s data center capacity and is pursuing global expansion with 12 data centers under construction in Turkey, Kenya, and Europe.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Saudi Arabia’s regulatory push creates perfect timing for Khazna’s expansion

Khazna’s Saudi expansion comes at a strategic moment as the kingdom has recently implemented comprehensive data regulations that are reshaping the market landscape.

Saudi Arabia’s Data Center Services Regulations came into effect in January 2024, establishing a regulatory framework that requires providers to register with authorities and maintain specific compliance standards 1.

More significantly, Saudi Arabia implemented the Personal Data Protection Law in September 2023, mandating that personal data be processed within national borders, effectively forcing international companies to establish local data facilities 2.

This regulatory environment explains why global cloud providers like Amazon ($10 billion investment) and Oracle have recently announced major expansions in Saudi Arabia, as mentioned in the original article.

The kingdom’s data center market is projected to grow from $1.33 billion in 2024 to $3.9 billion by 2030 at a CAGR of 19.6%, creating substantial opportunity for new entrants like Khazna 3.

2️⃣ The Middle East data center race reflects a strategic economic diversification plan

The competition between UAE and Saudi Arabia to become AI and data hubs represents a broader economic transformation strategy beyond just technology infrastructure.

Saudi Arabia’s Vision 2030 initiative specifically identifies digital infrastructure as a crucial component of economic diversification, with data centers serving as the foundation for future technology-driven growth 4.

The kingdom is planning computing capacity of up to two gigawatts, with costs ranging from $8-12 million per megawatt (potentially reaching $24 billion total investment), as cited by Saudi Minister Alswaha in the original article.

Recent Khazna developments