How AI Is Leading to an Increased Demand in Real Estate Development

Recent years have seen an exponential rise in the use of AI, with businesses continuously integrating AI into their operations and relying on cloud services more.  A less obvious consequence of this growing trend is the resulting increased demand for real estate development, specifically in data centres. Here is why:

AI models are very computationally intensive. Training and running models, especially deep learning models like GPTs, LLMs, and vision models, require vast amounts of GPU power. This requires data centres with high-performance hardware. Additionally (and unsurprisingly), AI needs huge amounts of data. Storing and processing the datasets used for training and interface consumes a lot of storage capacity, which drives demand for larger and more sophisticated data centre infrastructure. Supply-demand imbalances are already surfacing - in regions like Singapore, data centre vacancy rates have dropped to near record lows due to strong demand. 

Companies like Microsoft, Google, Amazon, and Nvidia are all massively expanding or upgrading their data centre investments, specifically citing increased AI demand as the catalyst.  Reports from firms like Dell’Oro Group project that AI-driven server and data center spending will grow much faster than traditional IT spending in the near future. McKinsey projects that global data centre capacity demand could increase by 19-22% annually through 2030, potentially rising from 60GW to as much as 219 GW. In 2024, the global AI data centre market was valued at USD 13.62 billion and is projected to grow by 28.3% per annum to 2030.

The AI-driven surge in data centre demand presents major opportunities for Africa and the Middle East.  Global tech firms are already expanding into the region. For example, Microsoft has cloud regions in South Africa and Qatar, while Google has plans for cloud regions in Kenya and Saudi Arabia. 

The Middle East is well-positioned as a data crossroads between Europe, Asia, and Africa, making it attractive for hosting global data hubs.  Meanwhile, Africa’s growing internet penetration and young population make it a fertile ground for digital growth, AI adoption, and localized cloud services. 

Africa and the Middle East have the opportunity to leapfrog legacy infrastructure, adopting energy-efficient and AI-optimized data centres from the start. Investment could help close the digital divide, boosting connectivity, cloud services, and local AI startups. Many African countries have abundant solar and wind resources, which align well with global pressure to power data centres sustainably.  Countries like Kenya and Morocco, already strong in renewables, could become AI-powered green data centre hubs.

With AI demand rising, local cloud ecosystems and sovereign data centres will become increasingly important to meet global demand, for national security, tech independence, and economic development. Continued rapid growth could be expected in the Middle East, especially in the UAE, Saudi Arabia, and Qatar, backed by government visions (such as Saudi Arabia’s Vision 2030). In Africa, South Africa, Kenya, Nigeria, and Egypt are currently leading the way, but secondary markets such as Ghana, Morocco, and Rwanda are fast emerging.