Saudi Arabia Data Centre Expansion Could Require Up To $42B In Capital

Saudi Arabia’s planned expansion of data centre capacity could require between $28 billion and $42 billion in project capital as the Kingdom seeks to scale digital infrastructure to support artificial intelligence, cloud computing, and its broader economic transformation, according to a report by Alvarez & Marsal (A&M).

The report estimates that between $14 billion and $32 billion of debt financing could be needed to deliver even part of the announced data centre pipeline, putting greater emphasis on whether projects can generate predictable cash flows and meet lenders’ requirements.

Saudi Arabia currently operates about 410 megawatts (MW) of installed data centre capacity, which is forecast to reach around 1 gigawatt (GW) by 2030.

Announced projects, however, point to substantially greater expansion as AI adoption, hyperscale cloud investment and national digital transformation initiatives drive demand.

The Kingdom has around 12 watts of data centre capacity per capita, compared with roughly 50 watts in both the United Arab Emirates and the United States, A&M said, suggesting significant room for additional development.

The capital requirements come as data centre developers compete for financing with other large infrastructure projects being developed under Saudi Arabia’s Vision 2030 programme.

“The Kingdom has made extraordinary progress in creating the conditions for data centre growth,” said Kurt Davis Jr., managing director and head of Debt & Capital Advisory for the Middle East and Africa at Alvarez & Marsal.

“Demand is strengthening, investment commitments continue to grow, and digital infrastructure investment continues to accelerate. As the market matures, greater focus is being placed on how projects are structured, financed and delivered.”
A&M said financing readiness is becoming an increasingly important factor for developers seeking to secure capital as the market expands.

The report identified three areas — contract, construction and capital — as critical to determining whether data centre projects can obtain financing on attractive terms.

Developers will increasingly need to secure anchor customers early, structure contracts that provide bankable cash flows, appropriately allocate construction risks and plan financing across the full lifecycle of a data centre asset, according to the report.

“As the market matures, bankability becomes a central consideration,” Davis said. “Sponsors that secure contracted revenue, allocate construction risk appropriately and take a long-term approach to capital structure will be best positioned to secure financing and accelerate delivery.”

Saudi Arabia has been seeking to expand its position as a regional digital infrastructure hub as investment in AI and cloud computing increases.

The scale of the planned build-out, however, means developers will need to tap significant amounts of private and debt capital while competing with other Vision 2030 projects for financing.

A&M said sponsors able to demonstrate contracted revenue, effective risk allocation and robust financing structures are likely to be better positioned to attract capital and move projects into construction.