The Middle East leads globally in cost-efficient data center construction, with an average of $9.93 per watt, according to Turner & Townsend’s 2026 Data Centre Construction Cost Index. This undercuts Europe’s $12.76 per watt, Asia’s $12.10, and North America’s $12.06, establishing the region as a prime location for large-scale AI infrastructure deployment.
The 10th edition of the index evaluates costs across 62 markets using data from over 500 live or recently completed projects and insights from 400 industry experts. Costs are standardized against a 60-megawatt design to ensure fair comparisons. Within the Middle East, the UAE ranks 58th globally at $9.20 per watt, followed by Qatar at $9.80 and Saudi Arabia at $10.80.
Alan Coary, Director and Data Centre lead for the Middle East at Turner & Townsend, attributes the region’s competitive edge to its low construction and energy costs alongside government-backed AI initiatives. Saudi Arabia’s HUMAIN initiative and the UAE’s investments through G42 and Khazna are scaling up computing capacity. In September, HUMAIN announced a partnership with DataVolt to construct a 100-megawatt AI data center in NEOM, reinforcing the region’s commitment to developing self-sufficient AI infrastructure.
Globally, data center construction costs rose in 2026 due to surging AI demand outstripping supply of land, power, and skilled labor. Despite a slight easing of inflation, 52% of surveyed experts anticipate further cost increases exceeding 6% in 2027, with 20% forecasting inflation above 15%. Power shortages pose the greatest challenge, with 56% of respondents identifying it as a major bottleneck. Utility connections now require one to two years for half of projects, while 32% face delays exceeding two years.
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Labor shortages exacerbate these pressures. 81% of respondents report moderate to severe skill gaps, driving up wages and complicating project timelines. Larger AI facilities demand specialized construction approaches to mitigate risks and accelerate delivery amid strained resources. By 2027, 52% of experts expect AI-focused data centers to account for over half of their project portfolios.
Tokyo remains the most expensive location at $18.28 per watt, followed by Osaka ($17.15) and Zurich ($15.93). North America and Europe dominate the high-cost segment, hosting half of the world’s data centers in North America and a quarter in Europe. In contrast, Shanghai offers the lowest costs at $5.79 per watt, with Mumbai ($6.83) and Ho Chi Minh City ($8.32) also providing cost advantages. These markets benefit from lower labor costs and greater workforce accessibility, reducing overall expenses.
The industry’s shift toward AI is accelerating investment, with PwC projecting global data center spending will swell to $1.8 trillion annually by 2050, up from $800 billion today. However, rising material costs, power constraints, and labor shortages persist as major obstacles. Paul Barry, Data Centre Construction Cost Index Lead at Turner & Townsend, said: “However, rising material and labour costs continue to create challenges globally, while access to power, specialist equipment and skills continue to create bottlenecks.”
