UAE strengthens smart cities with data centre investments

The UAE continues to consolidate its advanced model for building smart cities, underpinned by wide-ranging strategic investments, most notably in data centres, which form the operational backbone of smart urban systems and the knowledge- and innovation-based digital economy.

With the rapid expansion in the use of artificial intelligence, the Internet of Things and digital government services, data has become the main driver of urban life, while data centres have evolved into the infrastructure through which smart cities are managed in real time.

Amel Chadli, President of the Gulf Cluster at Schneider Electric, said that data centres now play the role of the brain managing smart cities, processing vast volumes of data instantaneously that can reach several terabytes in advanced environments.

She noted that this capability has become essential for the UAE, as modern urban systems, from transport and government services to energy and safety, rely on interconnected digital infrastructure powered by artificial intelligence and the Internet of Things.

She explained that projects such as Masdar City, the Dubai Urban Plan 2040 and the Digital Government Strategy 2025 demonstrate that the UAE is building an urban model based on data-driven decision-making to improve quality of life.

Turning this vision into reality, she added, requires secure, flexible local digital infrastructure capable of keeping pace with new applications.

Chadli stressed that the expansion of artificial intelligence applications will drive higher power requirements for data centres, which may exceed 20 to 50 kilowatts per server rack. She said that the UAE’s investments in sustainable, high-efficiency data centres therefore represent a fundamental step in building the cities of the future.

Kamel Al Tawil, Managing Director for Middle East and North Africa at Equinix, a global digital infrastructure and data centre company, said that data centres represent the digital brain of smart cities, enabling real-time data processing, analysis and intelligent decision-making.

He explained that rapid response, high capacity and ultra-connectivity are essential elements for modern technologies such as artificial intelligence, the Internet of Things and smart services.

Enabling seamless connectivity and integrated digital ecosystems, he added, directly supports the UAE’s vision of building connected, sustainable cities ready for future requirements.

Al Tawil noted the importance of localising data traffic to reduce latency, enhance performance and meet growing demand for digital services such as video, cloud computing, online gaming and e-sports, particularly as 83 per cent of internet traffic in the Middle East continues to pass through Europe.

Data represents the core foundation of any smart city, as the efficiency of urban services depends on the ability to collect data from millions of sensors and Internet of Things devices and analyse it in real time within data centres.

Without this capability, smart cities cannot operate as a single integrated system, and digital solutions remain fragmented with limited impact.

Economic indicators reflect the scale of this trend.

Reports by global research institutions, including Research and Markets, indicate that the UAE data centre market is expected to exceed $3.3 billion by 2030.

The UAE already has the largest data centre infrastructure in the region, with plans to double the number of centres in the coming years, reinforcing its position as a regional and global hub for data storage and processing, in line with the rapid expansion of smart city projects nationwide.

The UAE is among the world’s leading investors in smart cities, particularly in artificial intelligence, the Internet of Things, data centres and advanced telecommunications networks.

According to the IMD Smart City Index, issued by the World Competitiveness Center of the International Institute for Management Development, Dubai rose to fourth place globally in the 2025 smart cities ranking, while Abu Dhabi ranked fifth.

WAM