The Middle East is emerging as a critical hub for AI data centre development, benefiting from its structural and geographical merits, amid rising demand for AI infrastructure. 

The region’s strategic location offers a vantage point, placing it within a 2,000-mile radius of over three billion people, enabling it to serve Europe, Asia, Africa, and the Global South, with non-latency-sensitive AI inferencing at scale, according to a Boston Consulting Group report. 

Data centre power needs are forecasted to rise from 86 GW in 2025 to 198 GW by 2030, placing the Middle East at the forefront of supplying scalable, cost-efficient AI compute capacity. 

The Middle East’s competitive cost structures, including up to 50% lower leasing rates, low power tariffs, and advanced cooling systems, pare ownership costs. At the same time, economies such as Saudi Arabia and the UAE continue to press ahead with new data centre launches. 

“The Middle East is undergoing a pivotal transformation as it positions itself to become a global hub for AI infrastructure,” said Thibault Werlé, managing director at Boston Consulting Group.

“With strategic investments, progressive digital policies, and ambitious national visions across Qatar, the UAE, and Saudi Arabia, the region is building the foundation for scalable, next-generation AI compute.” 

Regional economies have undertaken major initiatives to bolster their efforts in reshaping the Middle East’s AI infrastructure landscape. 

Saudi Arabia has launched Humain, a Public Investment Fund company with a targeted 1.9 GW AI data centre capacity, along with partnerships with tech giants including Nvidia and AWS, to develop multi-hundred-megawatt AI campuses. 

Neighbouring UAE plans to host a 5GW AI campus in its capital under the US-UAE AI Acceleration Partnership and is importing 500,000 GPUs for regional and US partners, supported by Microsoft’s USD $15.2 billion investment in AI and cloud infrastructure. 

The Qatar Investment Authority has invested heavily in advancing the country’s AI ambitions, including a $3 billion platform with Blue Owl Capital to accelerate international expansion of AI and cloud infrastructure. Qatar’s sovereign wealth fund has also participated in Anthropic’s $13 billion funding round, aimed at meeting growing demand from enterprises.  

Regional governments must create streamlined, unified investment packages that integrate key inputs such as land, power, water, and connectivity within clear, time-bound frameworks, the report suggested.

“Expanding a diverse ecosystem of business and financing models, including hyperscalers, GPU-as-a-Service providers, equity platforms, and bond-backed investments, will be critical to enabling flexibility for market entrants,” the report added. 

The International Islamic Financial Market (IIFM) released the 14th edition of its annual sukuk report, revealing that global sukuk issuances totaled $205 billion in 2024, with international sukuk reaching their highest level since inception.

According to the report, international sukuk issuances rose 24.5% year-on-year to $65.6 billion, supported by improved global liquidity and lower funding costs. However, short-term sukuk declined to $59.1 billion, reflecting reduced domestic issuance and a shift away from short-term instruments.

The report also found that outstanding global sukuk reached $902.8 billion in 2024, with most issuances originating from Bahrain, Malaysia, Saudi Arabia, the UAE, and Indonesia. Emerging markets such as Türkiye, Pakistan, Qatar, Oman, and several African economies are expected to play a larger role in the coming years.

Dr. Ahmed Rufai, acting CEO of IIFM, said hybrid and intangible asset sukuk will be central to the industry’s future growth. “Standardizing documentation for these instruments is the cornerstone of a more mature and stable Islamic finance ecosystem,” he said, noting that harmonization would enhance transparency, reduce issuance costs, and support cross-border financing.

Halal Products Development Company, a Public Investment Fund company has inked a partnership with DinarStandard, a US-based advisory and research firm, to advance halal innovation.

The agreement, signed at the London Halal Forum 2025 held on November 20-21, reinforces a shared commitment to strengthen industry capabilities, and accelerate global growth through research, strategic development, and impactful collaboration.

The cooperation will help accelerate the development of the halal economy and foster innovation, as well as cement Saudi Arabia’s position as a global centre of excellence for the halal sector. 

Established in 2022, HPDC aims to localise knowledge, technology and innovation for the development of halal products as well as develop the local halal production industry through partnerships with domestic and international players.

The PIF subsidiary promotes investment and economic opportunities for the industry by introducing services, including specialized advisory. 

DinarStandard specializes in government innovation, the global halal economy and the social impact space. Since 2008, it has supported over 30 government entities, investment institutions, industry leaders, and multi-laterals from over 12 countries worldwide. 

DinarStandard is also the parent company and owner of Salaam Gateway. 

The US Department of Commerce said on Wednesday that it has authorised the export of advanced artificial intelligence (AI) chips to two companies in the UAE and Saudi Arabia.

Abu Dhabi-based tech firm G42 and Public Investment Fund (PIF) subsidiary Humain are both slated to receive American semiconductors, equivalent of up to 35,000 Nvidia Blackwell chips (GB300s).

The approvals are contingent on both companies meeting “rigorous security and reporting requirements”, the commerce department said in a statement. 

The purchase will promote “continued American AI dominance and global technological leadership”, the statement read. 

UAE’s Ambassador to the US, Yousef Al Otaiba, welcomed the authorization as  ”another milestone” in the partnership between both nations. 

“The authorization follows sustained engagement between both governments and reflects the confidence that underpins our collaboration in advanced technology and national security," Ambassador Otaiba said in a statement.     

Peng Xiao, Group CEO of G42, said the announcement marks a defining moment for the company and its partners as they segue from planning into execution. 

"Our shared infrastructure model sets a new benchmark for secure, high-performance computing that is designed to serve the needs of both nations. What we build in the UAE, we will continue to match in the US, maintaining symmetry and trust at every layer," added Xiao. 

The milestone accelerates foundational projects already underway in the UAE, including Stargate UAE, the 1GW AI compute cluster. 

The cluster forms part of the UAE–US AI Campus, an AI infrastructure hub that will include 5GW of capacity for AI data centres in Abu Dhabi, enabling US hyperscalers to offer latency-friendly services to companies operating within 2,000 miles of the UAE. 

Humain announced early Wednesday that it would deploy up to 600,000 Nvidia's AI chips in Saudi Arabia and the US over the next three years. 

Palm Azgar Finance Company, a licensed financial services provider based in Riyadh, has announced the launch of PUSD, a stablecoin issued through its British Virgin Islands affiliate and fully backed by UAE dirhams (AED) and Saudi riyals (SAR) reserves. The digital asset maintains a 1:1 peg with the U.S. dollar, with reserves held in regulated, Shariah-compliant Gulf institutions.

The company said PUSD is designed to provide a secure, transparent, and accessible bridge between Islamic finance and the global digital economy. Monthly third-party audits will verify that fiat currency reserves fully back each token.

The stablecoin is expected to debut on major cryptocurrency exchanges later this year, enabling faster cross-border payments, decentralized finance (DeFi) participation, and institutional use. According to Palm Azgar, the structure of PUSD ensures users maintain full control over their assets, with no freezing or blacklisting capabilities built into the system.

Founded in Riyadh, Palm Azgar Finance develops Shariah-compliant digital asset solutions aimed at expanding financial inclusion. Its newly launched product, Palm USD (PUSD), reflects growing regional interest in blockchain-based financial tools that combine transparency, Islamic finance compatibility, and real-world asset backing.

Debt capital market (DCM) activity in the GCC is expected to remain robust through 2026, underpinned by a strong issuance pipeline and favorable funding conditions, according to a new report by Fitch Ratings.

Outstanding GCC DCM volumes reached $1.1 trillion in the third quarter of 2025, marking a 12.7% year-on-year increase. Sukuk accounted for more than 40% of total issuances, rising nearly 22% year-on-year, outpacing the 7.2% growth in conventional bonds.

“We expect the GCC debt capital market to remain resilient into 2026, supported by robust issuance, favourable funding conditions, and a high-quality issuer base — over 81% of rated dollar sukuk are investment grade,” said Bashar Al Natoor, Fitch’s global head of Islamic finance. “However, the GCC DCM remains fragmented across its six member countries in terms of maturity, depth, and credit profile, with Saudi Arabia and the UAE the most developed, although all markets saw activity this year.”

Fitch noted that the GCC accounted for 32% of all emerging-market U.S. dollar debt issued in the first nine months of 2025 (excluding China) and is expected to remain among the top emerging-market issuers next year. Continued issuance will be driven by government initiatives to deepen domestic markets, diversify funding sources, finance budget deficits, and address upcoming debt maturities.

Saudi Arabia and the UAE remain the largest DCMs in the region, representing 46% and 30%, respectively, of total outstanding GCC debt. Fitch rates more than 70% of the GCC dollar sukuk market, with 65% of these issuances in the ‘A’ category and nearly 85% on a stable outlook.

While sovereign debt-to-GDP ratios across most GCC economies remain below global peer averages, Bahrain stands as an exception, with Fitch forecasting a ratio of 129% by the end of 2025.

The report also highlighted steady growth in environmental, social, and governance (ESG)-linked instruments. ESG DCM outstanding reached $62.8 billion by the end of the third quarter, with sukuk accounting for nearly half — a 54.1% increase compared with the previous year.

China has surpassed the West to become the Gulf region’s largest trading partner.  

Gulf-China trade rose 14.2% to $257 billion in 2024, edging past Gulf’s combined trade with Western economies – comprising of the US, UK and the Eurozone - for the first time, according to a report published by think tank Asia House. 

That came as trade flows between the Gulf region and the West dipped around 4% to reach $256 billion. 

While the current gap between the Gulf’s trade flows with China vis-à-vis the West is narrow, it is expected to broaden to $75 billion by the year 2028. Gulf-China trade is projected to reach $375 billion the same year. 

“While the margin is narrow and there may be short-term fluctuations in the relative weight of these partners, particularly given the downward trend in oil prices in 2025, structural and fundamental factors overwhelmingly suggest Gulf-China trade will widen its lead over the West in the coming decade,” the report read. 

Gulf-Asia trade has grown by 40% over the last decade, from $368 billion in 2014 to a $516 billion in 2024. 

Gulf’s trade with emerging Asia also rose 14.4% in 2024 to $516 billion despite lower oil prices. Emerging Asia consists of 34 Asian economies, including China, India, and most ASEAN members, but excluding Japan, Singapore, South Korea, Hong Kong, Macao, Taiwan, Australia, and New Zealand. 

Energy remains foundational to the GCC’s Asian pivot, with Asia expected to remain the world’s fastest-growing energy market through at least 2050.

The UAE is driving the Gulf’s trade with Asia, with the country’s trade with emerging Asia rising 27% in 2024 to $268 billion, driven by its comprehensive economic partnership agreement (CEPA) programme, SWF deployments and interest from Asian investors and businesses.

On a bilateral basis, the UAE-China corridor stood out in particular, with bilateral trade climbing 28% to $119 billion in 2024, overtaking UAE-West, which rose to nearly $110 billion. 

Two-way sovereign wealth interests 
Gulf-Asia financial interconnectivity has also developed in tandem, with Asia receiving 40% of the estimated $56 billion deployed by Gulf sovereign wealth funds in the first nine months of 2025.

Simultaneously, Asian financial services firms are expanding into the Gulf to capitalise on its expanding sovereign and private wealth pools. 

“Financial institutions on both sides of the corridor are preparing for a greater influx of capital in the future, with increasing collaboration between Asian and Gulf bourses,” the research suggested.  
 

The United Arab Emirates has completed its first government transaction using the Digital Dirham, marking a major step in the country’s push toward a fully integrated digital economy.

The pilot transaction was carried out jointly by the Ministry of Finance and the Dubai Department of Finance, in coordination with the Central Bank of the UAE (CBUAE), the authorities announced on Tuesday.

According to Ahmed Ali Meftah, executive director of the central accounts sector at the Department of Finance, the transfer was executed through mBridge, a multi-central bank digital currency (CBDC) platform developed by the CBUAE. 

The Digital Dirham forms part of the CBUAE’s Financial Infrastructure Transformation Programme, designed to enhance payment systems and advance the UAE’s position as a hub for financial innovation.

The Digital Dirham initiative aligns with the UAE’s broader digital asset and payments strategy, which includes developing regulatory frameworks for stablecoins and digital currencies. Launched in March 2023, the central bank’s strategy requires stablecoins to be fully backed by high-quality liquid assets and subject to independent audits.

In a related development, Abu Dhabi entities IHC, ADQ, and First Abu Dhabi Bank announced plans in April to issue a dirham-backed stablecoin under CBUAE supervision.

Analysts say the move reflects the UAE’s efforts to provide regulatory clarity and infrastructure that supports institutional adoption of digital assets, key factors that could strengthen its position as a leader in financial innovation across the region.

Artificial intelligence startups in the Middle East and North Africa (MENA) garnered record venture capital (VC) funding in the first six months of the year, illustrating how the technology has emerged as a prominent investment theme across the region.  

Regional AI startups netted $302 million in H1, making up 17% of the region's total VC  funding of $1.78 billion, according to data analytics platform Magnitt. 

It also recorded promising growth in deal count, garnering 26% of the region's VC deal flow, up from 23% in 2024.

The MENA region reported its best half-year results for AI funding, surpassing last year’s total funding by 16%.

“Artificial Intelligence has become MENA’s defining venture theme in 2025,” the Magnitt report read. 

The UAE and Saudi Arabia emerged as the destinations of choice, absorbing more than 70% of AI funding in the region. The ongoing momentum of the two countries to become AI-native sovereigns, is shored up by state-backed programs and large-scale tech events.  

Momentum is shifting from early pilots to scaled deployment, the Magnitt research suggested, with more mid-stage transactions and sovereign-backed initiatives driving commercialization. 

Saudi sovereign wealth fund launched Humain earlier this year, to build entire AI stacks as well as manage advanced AI technologies and infrastructure.