Middle East cheapest region for data centre builds: index

Dubai, UAE - The Middle East has the lowest average data centre construction cost of any region, at $9.93 per watt, according to the 10th edition of Turner & Townsend’s annual cost index, which says the region is well placed for the move to large-scale AI projects.

Europe came in at $12.76 per watt, Asia at $12.10 and North America at $12.06, putting all three regions above the Middle East average.

The global programme management company’s Data Centre Construction Cost Index, which Turner & Townsend describes as the leading worldwide benchmark for the sector, draws on more than 500 live or recently completed projects across 62 markets. A survey of over 400 experts from the data centre industry adds to the cost data. Each market’s indicative cost per watt is based on a typical 60 MW design, the company said.

Three Middle East markets appear in the ranking of 62. Saudi Arabia is placed 40th at $10.80 per watt, Qatar 53rd at $9.80 and the UAE 58th at $9.20.

Alan Coary, Director and Data Centre lead for the Middle East at Turner & Townsend, said: “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.”

In September, HUMAIN partnered with DataVolt on a 100MW AI data centre at NEOM.

Worldwide, the cost of building data centres kept climbing through 2026. The report attributes this to demand for AI computing power and large-scale projects growing faster than the supply of powered land and the skilled workers needed to build them.

Global cost inflation steadied to some degree over the year, the research found, but higher construction costs and risk are now structurally built into contract pricing. A worsening shortage of skills is also pushing up labour costs.

The size of new builds is an increasing factor in those costs, Turner & Townsend said. AI facilities in particular call for different delivery approaches, technical specialists and new models that balance risk, so that projects can work around stretched capacity and move faster.

Of the experts surveyed, 52% expect data centres supporting AI workloads to make up more than half of their projects in 2027.

The same share, 52%, saw costs rise by more than 6% in 2026, and around 20% reported inflation above 15%.

Looking to 2027, 28% of respondents worldwide expect inflation of 1-5%, which the report reads as a further easing of cost pressure. In all, 57% expect it to stay below 15%.

Power was named as a major obstacle to successful delivery by 56% of respondents. Just over half (52%) said a utility connection usually takes one to two years, and almost a third (32%) reported waits of more than two years.

The company’s release adds that 81% of respondents described skilled labour in their region as moderately or highly constrained.

Tokyo is the most expensive place in the index to build a data centre, at $18.28 per watt. Osaka follows at $17.15, then Zurich at $15.93, Singapore at $15.39 and Silicon Valley at $15.01.

Japan may hold first place, but 17 European and 13 North American markets account for almost half of the table, which Turner & Townsend said reflects the two regions’ continued dominance of the industry. North America is home to around half of the world’s data centres and Europe to about a quarter.

At the other end of the index, Shanghai is the cheapest location at $5.79 per watt, followed by Mumbai at $6.83, Ho Chi Minh City at $8.32, Bogota at $9.13 and the UAE at $9.20. According to the report, labour in these emerging data centre markets is both cheaper and easier to access.

Paul Barry, Data Centre Construction Cost Index Lead at Turner & Townsend, said: “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 2050. 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.”

He added: “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.”

The $1.8 trillion projection for 2050 is taken from PwC’s global AI infrastructure report, according to Turner & Townsend’s release.