Ayman Khaleq, a partner at Morgan Lewis, is widely recognized as one of the leading advisors on cross-border investments, digital infrastructure transactions, and securities technology–industry regulatory frameworks in the Middle East. Ayman guides institutional investors (including sovereign wealth funds), private equity investors, and regional operators as they navigate complex legal and regulatory landscapes and structure large-scale data center and tech-sector investments. His perspective offers valuable insight into how the United Arab Emirates (UAE) and Saudi Arabia have become two of the most dynamic and competitive data center markets globally.
His on-the-ground experience offers helpful insight into where the market is today—and where it is headed next.
1. How would you describe the current state of the data center investment market in the UAE and Saudi Arabia?
Over the past three years, the UAE and Saudi Arabia have shifted from emerging data-center markets to strategic regional hubs. Both governments have invested heavily in digital transformation initiatives—Saudi Arabia through Vision 2030 and the UAE through its national AI and cloud-first strategies. These policy frameworks have created a foundation for hyperscalers and regional operators to expand aggressively. In addition, sovereign wealth funds, in both markets, have led the way by channeling their investment power towards not just opportunistic, but also strategic acquisitions in the space, with an element of technology transfer and, increasingly, development.
We are now seeing strong demand not only from global cloud platforms but also from regional enterprises, fintechs, and AI-driven businesses looking for low-latency and sovereign-compliant infrastructure. The market has moved past early-stage experimentation and is now firmly in a growth and consolidation phase.
2. What are the main factors driving this surge in investment?
Four key drivers stand out:
- Data localization and sovereignty frameworks are encouraging providers to deploy capacity locally.
- AI adoption is driving demand for high-density compute environments that simply didn’t exist in the region a few years ago.
- Government support and investor-friendly policies, including free-zone incentives and streamlined licensing pathways, have significantly reduced barriers to entry.
- The Gulf’s ability to meet power demands associated with hyperscale data centers and semiconductor manufacturing.
These elements combined have positioned the Gulf as one of the most attractive growth markets globally for new data center builds and digital infrastructure deployment.
3. What challenges do investors typically encounter when entering this market?
Despite the momentum, investors must navigate several complexities. Power and water availability and long-term pricing remain central concerns, especially for high-density and AI-focused facilities. Securing long-term land tenure with appropriate zoning can also be challenging, particularly in Saudi Arabia where demand has outpaced supply in key metros.
Regulatory compliance—especially around data protection, cross-border transfer limitations, and foreign ownership rules—can pose structuring challenges. Moreover, investors must balance rapid deployment timelines with the need for robust partner selection, from engineering, procurement, and construction contractors to long-term operators. Those who succeed tend to form early strategic alliances and localize their delivery model. Finally, such transactions require that complex private placement structures— consisting of multi-jurisdictions corporate and investment funds—be developed and deployed due to the multiple capital sources involved in such deals.
4. Where do you see the biggest opportunities for investors over the next three to five years?
Some of the most compelling opportunities lie in AI-optimized data centers, edge deployments, and hybrid public–private solutions for government workloads. Hyperscalers will continue to expand, but the next wave of growth will come from enterprise demand, gaming, fintech, and national digital identity platforms—all of which require scalable, secure, low-latency infrastructure.
Saudi Arabia is likely to see significant build-out in secondary regions aligned with Vision 2030 mega-projects, while the UAE will continue to attract global operators seeking a gateway to the broader Middle East, Africa, and South Asia. We also expect to see governmental and private sector collaboration that should benefit the region, beyond just Saudi Arabia and the UAE. Investors who can deliver speed, efficiency, and energy-sustainability solutions will be best positioned to capture this next phase.
Closing Thoughts
The UAE and Saudi Arabia are rapidly becoming global hubs for digital infrastructure and AI-ready data centers. Morgan Lewis’s market-leading data center practice is at the forefront of guiding companies through complex and strategically important projects, operating at the intersection of real estate, energy, finance, and technology and delivering innovative solutions to help clients build, scale, and invest with confidence. As demand for AI, cloud, and sovereign data solutions accelerates, investors who understand the regulatory environment and partner with experienced regional advisors will find the Gulf to be one of the most compelling growth markets in the world.