Saudi Arabia Data Center Colocation Market

Saudi Arabia Data Center Colocation Market Size and Share:

The Saudi Arabia data center colocation market size was valued at USD 603 Million in 2024. Looking forward, IMARC Group estimates the market to reach USD 1,659 Million by 2033, exhibiting a CAGR of 11.9% from 2025-2033. The market is expanding rapidly, driven by increasing digital transformation, rising cloud adoption, and government investments in IT infrastructure. Additionally, demand for scalable, cost-effective solutions continues to attract enterprises seeking reliable data storage and management services, resultantly supporting the market growth.

Saudi Arabia's data center colocation market is principally driven by the rapid digital transformation across industries and the government's push for diversification under Vision 2030. The growing adoption of cloud computing, fueled by increased demand for scalable IT infrastructure, has significantly boosted the need for colocation facilities. For instance, as per industry reports, Saudi Arabia is rapidly embracing cloud computing, with annual public cloud service spending expected to reach USD 2.5 billion by 2026, reflecting a 25% CAGR. Furthermore, enterprises are increasingly outsourcing data center operations to reduce costs and focus on core activities. Additionally, the country's strategic location as a digital hub for the Middle East positions it as a key player in attracting global data center investments.

The Saudi Arabia data center colocation market is further supported by rising investments in advanced technologies, including artificial intelligence (AI) and Internet of things (IoT), which demand high-performance computing capabilities. In addition, the increasing penetration of e-commerce and fintech sectors has heightened the need for secure and reliable colocation services, thereby facilitating the market expansion. For instance, according to the International Trade Administration, by 2024, the number of internet users in Saudi Arabia engaging in e-commerce activities is projected to reach 33.6 million. Moreover, the government's initiatives to enhance connectivity through submarine cables and fiber-optic networks are strengthening the overall digital infrastructure. Such developments make Saudi Arabia a growing hub for data center colocation services in the region.

Saudi Arabia Data Center Colocation Market Trends:

Increasing Digital Transformation and Adoption of Cloud Services

The magnifying adoption of cloud services is a crucial trend in the Saudi Arabia data center colocation market. Several businesses across key industries are adopting safe and comprehensive solutions to manage escalating data requirements. This increasing inclination is primarily fueled by the government's Vision 2030 objectives, which heavily focus on economic augmentation and digital transformation. Moreover, colocation facilities are notably profiting from heightening investments in leading-edge IT infrastructure, facilitating businesses to shift to hybrid cloud ecosystems. For instance, in November 2024, Saudi Arabia launched Project Transcendence, a USD 100 billion initiative, to establish itself as a leader in artificial intelligence, data analytics, and advanced technology. This investment focuses on developing cutting-edge data centers, supporting startups, and expanding AI infrastructure to enhance domestic growth and global competitiveness. Furthermore, the market is experiencing accelerating need from various enterprises striving to minimize their capital expenditures by utilizing colocation services for improved operational efficacy and expandable computing resources.

Rapid Expansion of Local and Global Players 

The Saudi Arabian colocation market is expanding with significant investments from local operators alongside global entrants. For instance, in March 2024, Zoho Corp, a prominent global technology company, unveiled two new data centers in Saudi Arabia, expanding its global network to 18 facilities. The company also announced plans to invest around USD 133.33 million in digital infrastructure development and fostering strategic partnerships with local government entities. Such leading players are also increasing capacity with Tier III-certified facilities, addressing growing regional data demands. Resultantly, the competition is driving innovation, with operators incorporating advanced technologies and tailored solutions for diverse industries. Moreover, new facilities are strategically being located to serve hyperscale and enterprise clients, creating a dynamic landscape where partnerships and acquisitions are shaping market growth and operational excellence.

Increasing Focus on Sustainability and Energy Efficiency 

Sustainability is rapidly emerging as a principal theme in the Saudi Arabian data center colocation market. Operators are actively focusing on renewable energy sources and energy-saving technologies to address the stringent global sustainability frameworks. Upgraded cooling systems and AI-powered energy management systems are being deployed to significantly lower environmental impact. This caters to the global inclination towards green data centers, which is increasingly gaining momentum in Saudi Arabia. Moreover, sustainable digital transformation ventures are bolstering requirement demand for environmentally friendly data centers, further fostering this trend. In addition, the rising emphasis on sustainability not only improves operational efficacy but also fortifies the market's appeal to environmentally aware firms, contributing to long-term competitiveness as well as expansion. For instance, in November 2024, Ezditek, a prominent Saudi Arabia-based digital infrastructure and data center firm, initiated the construction of its data center RUH01 in Riyadh. This 25 MW facility, designed to facilitate sustainable and scalable digital transformation, is scheduled to launch by Q1 2026.

Saudi Arabia Data Center Colocation Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the Saudi Arabia data center colocation market, along with forecasts at the regional and country levels from 2025-2033. The market has been categorized based on type, organization size, and end use industry.

Analysis by Type:

• Retail Colocation
• Wholesale Colocation
   

The retail colocation segment in Saudi Arabia’s data center market is expanding consistently, mainly boosted by small and medium enterprises (SMEs) preferring comprehensive and cost-efficient solutions. This type of colocation provides clients dedicated cabinets or racks, offering scalability for enterprises with bounded IT demands. Retail colocation is especially compelling to businesses demanding access to resilient IT infrastructure without the capital investment of developing their own facilities. In addition, with magnifying digitalization across major sectors, retail colocation remains an ideal option for enterprises seeking to manage their IT operations effectively while emphasizing on key business functions.

Wholesale colocation is gaining traction in Saudi Arabia, catering to large enterprises and hyperscale cloud providers requiring substantial space and resources. This segment involves leasing entire data halls or substantial portions of a facility, making it ideal for organizations with extensive IT infrastructure needs. Moreover, wholesale colocation offers economies of scale, enhanced customization, and greater control over infrastructure. Additionally, the increasing demand for cloud services and digital transformation initiatives in Saudi Arabia has amplified interest in wholesale colocation, positioning it as a critical component of the market’s growth trajectory.

Analysis by Organization Size:

• Small and Medium Enterprises
• Large Enterprises
   

In Saudi Arabia, small and medium enterprises (SMEs) are increasingly adopting data center colocation services to enhance their IT infrastructure without incurring significant capital expenditures. These businesses benefit from scalable solutions, improved operational efficiency, and robust security offered by colocation facilities. Moreover, the growing digital transformation among SMEs, supported by government initiatives encouraging technological adoption, has further boosted demand. Furthermore, colocation services enable SMEs to focus on core business activities while leveraging advanced data center infrastructure to support their growth and competitiveness in an evolving market.

Large enterprises in Saudi Arabia rely heavily on data center colocation services to manage extensive data requirements and ensure business continuity. These organizations prioritize high-performance infrastructure, advanced security protocols, and reliability, which colocation providers deliver through state-of-the-art facilities. With increasing reliance on cloud computing and data analytics, large enterprises are investing in colocation to achieve scalability and efficiency. In addition, strategic partnerships with colocation providers also enable these enterprises to meet growing operational demands, reduce energy consumption, and align with sustainability goals, strengthening their market presence.

Analysis by End Use Industry:

• BFSI
• Manufacturing
• IT and Telecom
• Energy
• Healthcare
• Government
• Retail
• Education
• Entertainment and Media
• Others
   

The BFSI sector in Saudi Arabia is increasingly leveraging data center colocation services to enhance operational efficiency and ensure regulatory compliance. By outsourcing data center needs, financial institutions can focus on core activities while benefiting from secure, scalable, and cost-effective infrastructure. Furthermore, colocation facilities offer robust disaster recovery solutions and high availability, which are critical for maintaining uninterrupted financial services. This strategic approach enables BFSI entities to adapt to evolving technological demands and customer expectations.

Saudi Arabia's manufacturing industry is adopting data center colocation to support digital transformation initiatives, including automation and smart manufacturing. Colocation services provide the necessary IT infrastructure to handle large-scale data processing and storage, facilitating real-time analytics and decision-making. This approach allows manufacturers to optimize production processes, improve supply chain management, and enhance product quality, thereby increasing competitiveness in both domestic and international markets.

The IT and telecom sector is a significant consumer of data center colocation services in Saudi Arabia. Telecom operators and IT service providers utilize colocation facilities to expand network reach, improve service delivery, and manage the growing demand for data services. Moreover, colocation offers scalable solutions that support rapid deployment of new technologies, such as 5G and IoT, enabling these companies to maintain a competitive edge and meet customer expectations for high-speed, reliable connectivity.

In Saudi Arabia's energy sector, data center colocation services are essential for managing vast amounts of data generated from exploration, production, and distribution activities. Colocation facilities provide the computational power and storage capacity required for advanced analytics, predictive maintenance, and real-time monitoring. As a result, this enables energy companies to optimize operations, reduce costs, and enhance safety measures, contributing to more efficient resource management and sustainability efforts.

The healthcare industry in Saudi Arabia is increasingly relying on data center colocation to support electronic health records, telemedicine, and other digital health initiatives. Colocation services offer secure and compliant environments for sensitive patient data, ensuring privacy and facilitating seamless information exchange among healthcare providers. Furthermore, this infrastructure supports improved patient care, operational efficiency, and the integration of emerging technologies such as AI and machine learning in medical diagnostics and treatment.

Saudi Arabian government agencies are utilizing data center colocation to support e-government services, enhance public sector efficiency, and ensure data sovereignty. Colocation facilities provide secure, scalable, and reliable infrastructure that enables the deployment of digital services to citizens and businesses. This approach aligns with national initiatives aimed at digital transformation, improving service delivery, and fostering transparency and accountability within government operations.

The retail sector in Saudi Arabia is adopting data center colocation to support e-commerce platforms, customer relationship management systems, and supply chain operations. Colocation services offer the necessary IT infrastructure to handle high transaction volumes, data analytics, and personalized marketing strategies. Additionally, this enables retailers to enhance customer experiences, streamline operations, and adapt to changing consumer behaviors, thereby driving growth and competitiveness in the market.

Educational institutions in Saudi Arabia are leveraging data center colocation to support online learning platforms, research initiatives, and administrative systems. Colocation services provide scalable and reliable infrastructure that facilitates the delivery of digital education resources, collaboration tools, and data storage solutions. Moreover, this supports the modernization of educational practices, enhances accessibility to learning materials, and fosters innovation in teaching and research methodologies.

The entertainment and media industry in Saudi Arabia is utilizing data center colocation to manage content delivery networks, streaming services, and digital content production. Colocation facilities offer the bandwidth, storage, and processing power required to deliver high-quality content to diverse audiences. Furthermore, this enables media companies to expand their digital offerings, improve user experiences, and capitalize on the growing demand for online entertainment, thereby increasing market reach and revenue opportunities.

Regional Analysis:

• Northern and Central Region
• Western Region
• Eastern Region
• Southern Region
   

The Northern and Central regions are currently witnessing elevating need for data center colocation services, chiefly boosted by public sector ventures as well as government programs. Major sectors including defense, finance, and education are actively utilizing colocation facilities to address their magnifying data management and storage requirements. Furthermore, the region benefits from strong digital infrastructure and a concentration of major businesses, creating a robust market for advanced IT services. Strategic investments in cloud computing and AI technologies further enhance the appeal of colocation services in these regions.

The Western Region, home to major urban hubs and economic zones, sees significant demand for colocation services from the tourism, retail, and logistics sectors. These industries rely on data centers to handle extensive customer data and streamline operations. Furthermore, the region’s focus on smart city initiatives and digital transformation, coupled with its growing e-commerce activities, has accelerated the adoption of colocation services. Additionally, with an emphasis on scalability and sustainability, operators in the Western Region are optimizing their offerings to align with industry-specific requirements.

The Eastern Region, known for its robust oil and gas industry, is a key contributor to the Saudi data center colocation market. The energy sector’s demand for secure and scalable IT infrastructure drives the need for advanced colocation solutions. Additionally, the region's growing industrial base and focus on digital innovation make it a hub for technology-driven industries. Moreover, with rising adoption of cloud services and digital analytics, colocation providers are capitalizing on the region’s diverse and expanding end-use industries to drive market growth.

The Southern Region of Saudi Arabia, with its emerging industrial base and growing emphasis on digital connectivity, is seeing increased adoption of colocation services from the agriculture, mining, and small business sectors. These industries rely on efficient data management and IT infrastructure to optimize operations. Furthermore, the region's strategic focus on regional development and digital transformation has created opportunities for colocation providers to expand their presence. In addition, tailored services addressing the unique needs of these industries are fostering steady market growth in this region.

Competitive Landscape:

The competitive landscape is dynamic, with strong participation from established operators and new entrants. The market is mainly driven by increasing demand for digital infrastructure, supported by advancements in technology and strategic partnerships. Moreover, collaborations between data center companies are enhancing innovation, sustainability, and energy efficiency, fostering a competitive and evolving market environment. For instance, in November 2024, Pure Data Centers announced a strategic collaboration with Dune Vaults for the development of hyperscale data center campuses in Saudi Arabia, with IT capacity exceeding 100MW. In addition, several operators are focusing on innovative solutions to meet the growing needs of cloud services, scalable IT infrastructure, and enhanced data management, solidifying Saudi Arabia's position as a regional hub for data center services.

The report provides a comprehensive analysis of the competitive landscape in the Saudi Arabia data center colocation market with detailed profiles of all major companies.

Latest News and Developments:

• In October 2024, DataVolt, a Saudi Arabia-based data center developer, signed a MoU with Center3 to provide maintenance as well as operational services for data centers in Saudi Arabia. The companies aim to utilize their expertise to boost dependability, efficacy, and innovation in data center management.
• In May 2024, Amazon Web Services announced plans to launch data centers in Saudi Arabia by 2026, with an investment exceeding USD 5.3 billion. The new cloud region will enhance data security, support workload management, and deliver improved speed for users in the region.

Saudi Arabia Data Center Colocation Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the Saudi Arabia data center colocation market from 2019-2033.
• The research study provides the latest information on the market drivers, challenges, and opportunities in the Saudi Arabia data center colocation market.
• Porter's Five Forces analysis assists stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the Saudi Arabia data center colocation industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.