Abu Dhabi's Khazna Data Centres, one of the industry's largest operators in the Middle East, will be building a 100-megawatt data centre in Ajman, which will be its biggest in the Emirates, the company said on Monday.
Khazna is expecting data centre capacity in the UAE to nearly double to 850 megawatts by 2029 as it aims to capitalise on growing demand, its chief executive Hassan Al Naqbi told The National in an interview on the sidelines of the Gitex Global technology conference in Dubai.
The 360MW capacity that the company currently has highlights its continued investment in the sector, he said.
The new Ajman facility, which is expected to be operational by the third quarter of 2025, is “unique” and designed for artificial intelligence-ready applications, Mr Al Naqbi said. It is part of series of launches as two more data centres, each with a capacity of 30 megawatts, are to be announced “in the next few weeks”, he added.
While he did not disclose the cost of the data centres, he hinted that the average value of construction per megawatt is “between $8 million and $12 million”.
Khazna, a unit of Abu Dhabi AI major G42, currently has 24 live data centres in the UAE and eight under construction, helping it to corner a market share of about 74 per cent, according to Mr Al Naqbi.
“Based on the demand we have … we expect the UAE to ramp up and accelerate demand to at least 850 megawatts by 2029,” he said.
Remote working trends, largely established in response to the coronavirus pandemic of 2020, have led to increased data consumption fuelling the adoption of cloud services. This has continued to grow in the Middle East because of technology savvy young consumers and an evolving digital landscape, underpinned by governments' efforts to develop the economy.
This has given data centre and cloud providers an incentive to tap into the potential offered by the region. Among the most notable global companies that have invested in the region are Microsoft, Amazon, Oracle, IBM and Alibaba Cloud, which have all opened cloud and data centres.
Khazna manages key infrastructure that hosts critical user data, “liberating businesses to realise their goals and focus on future commerce”, according to its website. It has data centres in Abu Dhabi, Al Ain and Dubai.
Within the Middle East and North Africa, Khazna is in the final stages of identifying the land on which a $250 million data centre will be built in Egypt, which is expected to be completed by 2026, and is in advanced stages in constructing another in Saudi Arabia, the Arab world's biggest economy, Mr Al Naqbi said.
In May, G42 announced that it will build a geothermal energy-powered data centre in Kenya in partnership with Microsoft. Talks in Turkey are also at an advanced stage, he added.
In South-East Asia, Khazna is also looking into Malaysia, Indonesia, Thailand, Vietnam and the Philippines – “top of the list”, Mr Al Naqbi told The National in May – as part of an aggressive global expansion.
“We're looking at [several] areas today. We are basically adding a lot of resources to help us navigate and try to explore opportunities,” he said on Monday.
“We try to be a global player, but try to do it in the right way, in the sense that when we enter the market, we make sure that we understand the macroeconomics and which partners we need within that market.”
Khazna will also boost its sustainability efforts, aligning with the UAE's goals of becoming net-zero by 2050, by ensuring all its data centres will be energy efficient and environmentally responsible, Mr Al Naqbi said.
“We have moved away from [using] diesel and reducing carbon emissions. All our facilities have a zero-waste policy … that allows us actually to operate more efficiently as everything has a sustainability element to it,” he said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
