The Middle East is one of the least expensive regions globally in which to construct data centres and is consequently ideally positioned to benefit from a shift towards large-scale AI projects, according to the latest research from Turner & Townsend, the global programme management company.  

Turner & Townsend’s Data Centre Construction Index (DCCI) report, now in its 10th edition, is the leading global benchmark for data centre construction costs, drawing on over 500 live or recently completed projects in 62 markets, and supplemented by a survey of over 400 experts working across the global data centre industry. 

The research reveals that the Middle East is currently the least expensive region globally for data centre construction ($/W), averaging $9.93, making the region a more affordable location than Europe ($12.76), Asia ($12.10) and North America ($12.06).

Three Middle East locations featured in the top 62 locations globally, including Saudi Arabia ($10.80) at 40, Qatar ($9.80) at 53, and the UAE ($9.20) at 58.      

Alan Coary, Director and Data Centre lead for the Middle East, at Turner & Townsend, comments: “The Middle East stands to benefit from its relatively low cost of construction and energy, as well as strong government backing for AI infrastructure. Saudi Arabia’s HUMAIN initiative and the UAE’s continued investment in AI and hyperscale data centre development through G42 and Khazna are transforming the region’s computing capacity and positioning it as a globally competitive AI hub. This reflects a wider trend towards sovereign AI and government-backed digital infrastructure programmes.” 

Data centre construction costs continued to rise globally in 2026, as surging demand for AI computing power and large-scale data centre projects outpaced the supply of powered land and skilled labour to deliver them.  

Despite some stabilisation in global cost inflation in 2026, structurally higher construction costs and risk are increasingly priced into contracting, while a deepening skills shortage is putting pressure on labour costs.

The rising costs of data centre construction are increasingly driven by the growing scale of the builds, particularly for AI facilities, which require alternative delivery approaches, technical specialists and new risk-balanced models to overcome strained capacity and accelerate schedules.

52 per cent of respondents anticipate a majority (>50 per cent) of their 2027 projects will be data centres to support AI workloads. 

52 per cent of survey respondents experienced cost increases in 2026 above 6 per cent, with approximately 20 per cent reporting inflation above 15 per cent.

In 2027, 28 per cent of global respondents expect inflation to be between 1-5 per cent, indicating a continued softening of cost pressure.

57 per cent of respondents expect inflation to be below 15 per cent.

56 per cent of survey respondents identified power as a major obstacle to successful delivery, with over half (52 per cent) reporting that utility connections typically take between one and two years, and almost a third (32 per cent) reporting timeframes over two years. 

The highest cost locations ($/W) in the index were Tokyo ($18.28), Osaka ($17.15), Zurich ($15.93), Singapore ($15.39) and Silicon Valley ($15.01).

While Japan holds the top spot in the index, the fact that 17 European and 13 North American markets make up almost half of the top table reflects these regions’ continued dominance of the industry.

Around half of all global data centres are in North America, and a quarter are in Europe. 

By contrast the lowest cost locations ($/W) in the index were Shanghai ($5.79), Mumbai ($6.83), Ho Chi Minh City ($8.32), Bogota ($9.13) and the UAE ($9.20). These emerging data centre markets provide cheaper labour and greater access to it.

Paul Barry, Data Centre Construction Cost Index Lead at Turner & Townsend, comments: “Over the decade since we first published our construction cost index we have seen the data centre industry completely transformed, with capital expenditure on data centres now $800 billion per year, and expected to reach $1.8 trillion by 20501. AI’s exponential demand for computing power, combined with cloud adoption and the growing importance of data and sovereign capacity, is driving data centre investment and development at unprecedented scale, reshaping the construction landscape.

“However, rising material and labour costs continue to create challenges globally, while access to power, specialist equipment and skills continue to create bottlenecks. Data centres are also subject to increasing scrutiny, with political and community consent essential to delivery. AI-driven demand for gigawatt-level power and liquid cooling for increased rack densities is driving the growth of larger-scale data centres, but the shortage of skilled labour and the greater risks involved in the delivery of larger more complex projects is driving a cost premium.” -TradeArabia News Service