Middle East Construction & Real Estate Podcast

The Future of Data Centres in the Middle East: A Conversation with John Rippingale, Managing Director of Sudlows Consulting

• Jonathan Eveleigh • Season 1 • Episode 4

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Get ready to navigate the digital landscape of the Middle East as we sit down with John Rippingale, the Managing Director of  Sudlows Consulting, who is about to demystify the world of data centres for us. Ever wondered about the driving forces behind the data centre industry? Well, you're about to learn all about it - from the explosion of cloud computing and the migration of government services, to the insatiable everyday demand for data. 

John Rippingale, a seasoned expert, walks us through the intricate process of designing and commissioning these high-performance data centres. He shares invaluable insights on the critical need for reliable power supply, temperature control, and robust ERs. Furthermore, we delve into the future of these facilities as John enlightens us on the importance of future-proofing data centres to cater to the growth needs of this rapidly evolving sector.

Finally, we dive into the green side of the data centre industry as we explore the impact of sustainability and green technology on this market. We discuss how adopting sustainable design principles and tailoring temperature ranges can significantly reduce the carbon footprint of these centres. As we wrap up, John offers a glimpse into the lucrative future of the Middle East Data Centre market, a must-hear for any tech enthusiast or investor eyeing this booming sector. This episode promises a wealth of knowledge and insights that you don't want to miss!

https://mecrepodcast.buzzsprout.com/

Speaker 1:

Welcome everyone to episode four of the Middle East Construction and Real Estate Podcast. Thank you for joining us once again. I am delighted to be joined on this episode by John Ripengale, managing Director of Southerlose Consulting, an award-winning critical infrastructure specialist and consultant of choice for critical data center projects for several decades in the UK and now across the Middle East. In today's rapidly evolving digital landscape, data centers play a crucial role in the storage, management and dissemination of huge amounts of information. Whether you are a seasoned professional in this specialist field or just looking to gain insights into the world of data centers, this conversation with John promises to be, to say the least, enlightening in terms of the worldwide demand for greater amounts of data. John brings a wealth of knowledge and experience to the table, and together we will explore the latest trends, challenges and innovations shaping the data center industry in the Middle East region. So let's get started. Hi, john, and welcome, and thanks so much for joining me on this episode of the Middle East Construction and Real Estate Podcast.

Speaker 2:

Hi, jonathan, thanks for having me.

Speaker 1:

Now you're very welcome. Thanks for joining us. Look to kick things off. Can I just get you to briefly explain who Southerlose are, please?

Speaker 2:

Yeah, sure, no problem. Southerlose Consulting, we're a specialist professional service company which focus within critical environments. So to most people that would be data centers. So anything where the equipment on the end of the systems needs to be kept on through thick and thin, through power outages, would define a critical infrastructure. So around 95% of all works in the data center sector, predominantly MEP focused.

Speaker 1:

Okay, great, and that's seen, that's great. I can remember when you were Southerlose, were considering coming to the Middle East entering the Middle East market and I'm guessing it was about six or seven years ago. I had a couple of meetings with your colleague, a guy called Andy Hurst, and I can remember being blown away by some of the statistics he was citing around the future demand for data and where the whole data center market effectively was likely to go to meet that demand. Can you cite any of those similar demands statistics for today, just to set the scene for us?

Speaker 2:

Yeah, sure, jonathan. So it was around nine years ago. We actually set the offer up and there would have been Andy Hurst you met a few times, coming out to sort of test the market and see what the appetite was, and the landscape was quite different than the data centers. I mean. From when we initially started the office here there's been sort of exceptional growth beyond what we would have envisaged. Just from facilities aspect. We're probably looking. Currently the market is estimated around three and a half billion in Middle East and North Africa and that's targeted to reach about 10 billion by 2028. So that's a 20% compound annual growth rate which is quite a promising amount of growth. And if we look back to when we started the business nine, 10 years ago, any forecasts for capacity and demands although initially it took some time the demand to come we've. The market has beaten the conservative forecast and I think anyone. Now in the data center sector here, especially in the UAE, everyone is busy, that's all the way, from consultant supply chain contractors and the developers and operators.

Speaker 1:

Yeah, I want to come on to a bit of that as we go through. Actually, those figures you mentioned, the dollars, are they that? Is that the? Is that we're not in dollar term? Yeah, wow, it's huge, isn't it? Absolutely huge. And just in terms of what you just described as the sort of broader Middle East market, I think you just I think you said the Middle East and North Africa how does that compare with what's happening globally, if you like? Is that growth that you've just cited similar globally, or is it greater here in the Middle East? How?

Speaker 2:

No, it's definitely great to hear in the Middle East. If you look at, say, europe flat the markets, which is Frankfurt, london, amsterdam, paris and now Dublin, they're obviously much more mature markets with a greater number of megawatts of capacity already established. We rewind, say, two or three years ago there was barely sort of 50 megawatts capacity in the UAE. Now we're looking at about what's already live and what's in construction, so actually projects under execution. Once they're finished they'll be best part of 300 megawatts and the current predict current predictions are that should be hitting around the sort of gigawatt in the UAE and a lot of that's fueled by AI, which is I'm sure we'll talk a bit about that later on the future demands, because that's a whole nother topic of the growth prediction, which throws out any kind of market research that's been done in the last three years.

Speaker 1:

Yeah, makes it very unpredictable, doesn't it? And just again, hanging on to what you just said, then, about that exponential growth in the Middle East, is it any particular industry or sector that's driving that, or is it across the board, generally?

Speaker 2:

So it's obviously the adoption of cloud computing and migration of government services. We're very fortunate in the UAE that the rulers here in the government were very pro-technology in adopting latest trends and smart city initiatives, which the data center is basically the cornerstone of that, and there's obviously enticements for businesses not just government but also private entities to digitize to make things more seamless for the general population. So that's one aspect of it. There's also the demand for data from just normal people like you and I. So if you look back in the last two years, there is more data stored about humanity than on record for the previous All the years before that. Yeah, you wish A lot of that's probably silly cat videos on YouTube and things like that, but nonetheless it's storage of data.

Speaker 2:

You look at the Quality of online movies and online video gaming, which is the video. Online video gaming is Really big in this region. Saudi's got one of the biggest number of online Gamers and that's a huge market. I've got a good friend who works in e-sports For one of the big, for one of the big school groups here, and it's something. I didn't realize how big it is. You've got Sponsorship by like lamb again, he's got things like that he was sponsoring his online games, whether it's racing simulator cars or its football or any kind of sports, and it's actually into school leagues now of online gaming, which means you can be sat in Dubai playing someone halfway around the world, given the time zones, and be competing On that level, so it makes it attainable for all. Yeah, I didn't realize how big the market was my game I'm not playing game, video games a long time ago. But yeah, there's a. I still have some friends who play video games. I say you've got far too much time with my hands, but Younger friends, I'm sure.

Speaker 1:

just just just also, you mentioned Saudi there. He mentioned Saudi. I mean, is there any? Is there any geographical Difference, if you like, between in the in the Middle East in terms of any particular areas that are experiencing growth more than others?

Speaker 2:

So there is gonna be a lot of larger market in the UAE. I think the business environment created within the UAE to facilitate that and also maturity of the market here. And there's all subsea connectivity between the East and West. The Middle East sits so halfway between Europe and Asia. For undersea connectivity there's a. There's a really good website that you can actually see all the undersea connectivity of all the fiber cables and there's been a lot of new cables laid around Africa the two Africa cable, that that comes in into the Middle East here. So that kind of drives the the demand and connectivity and reducing the access time to access that data.

Speaker 2:

We've also got data sovereignty. That Data is the new Oil, as many people have said before. But who has the data will kind of control things and obviously there's a lot of sensitivity around what's being stored. You know all banks are online personal details and what obviously, when rightfully, governments have said here is that. Yet we're happy to have all these cloud players. You know the Amazon is Microsoft's, oracle's here, but the data can't be stopped all the way around the world in Texas or in Frankfurt. The data needs to be here. The sovereignty of the data needs to be within the Protected, within the country's geographic boundaries. So that again has fueled the requirement to have More data centers built locally here.

Speaker 1:

Yeah, interesting, fascinating, just just turning to the actual physical delivery, then, of data centers. What, what demands do data centers place on the contractors and the supply chain delivering them? Compared maybe two other Types of, I'll just say, more regular types of projects, if you like, what is it that data center clients demand from their supply chain Most critically, I guess? Okay, so on data center.

Speaker 2:

Clients are normally. They're normally engineers themselves and they're all that tend to be quite quite geeky also. So they're they're very competent and technically so they put quite high demands both on the other consultants they work with and the contractors. There is obviously the MEP to civil mix. It's quite heavy on the MVP. It's around 80 to 75 percent is MEP and a lot of that can some contractors come as cover to that on not understanding the intricacies of how dense the services are within the inside of building, which Typically would be.

Speaker 2:

It would be the other way around if it was, say, an office building or a hotel and the Size to carry out all the coordination, which is why things have to be done In being the model correctly. That's the one part of it. It's also then the actual commissioning of the systems. So data centers there's very strict tolerances with the environment in the data hall which say that now you are leasing to a hyper scale client and Amazon or Microsoft, you have to keep the power on and also keep the certain temperature range, otherwise there's quite large penalties Put on to the operator. So the type of commissioning that we do is very rigorous.

Speaker 2:

All the equipment is very close, controlled, controlling to within point one of a degree, and a lot of the supply chain Don't understand the depth which we would like to see, don't understand the depth which we would go to in setting up the different systems. They normally say it's not just, it's not like a TV. You don't just, you know, bug it in and turn it on and auto scan and there's all your channels. You're going into every single sub menu, sub menu, defining every single thing which is to meet the clients requirements. Yeah, I guess you could look at it like that.

Speaker 2:

I mean, how many of us go into the depths of our settings on our TV or even into our car Stereo systems to configure things? You generally don't just turn it on and it's okay. But yeah, within all these pieces of equipment there's many different parameters and set points and all of those need to be Configured and then they need to interact with the other systems as well. And we see that that's that's a challenge and people underestimating how long it takes to do that and to get things performing as they should do. And you know, for our clients that we work with, it's paramount that those systems which they're paying a lot of money for work Exactly as they need to, because if they don't, and there's an issue once they're operational, that the penalties are huge and can be, you know, business destroying, but along out.

Speaker 1:

And sorry, sorry, john, the code. All of this is going on. Whatever Ryan saying, all of this is going on in Pretty tight time scales, I mean. I mean data centers get delivered in In you know, pretty bright next beast, don't they? A lot of the time.

Speaker 2:

Yeah, so current projects around the 10 to 15 megawatt IT load, based on current supply chain, you're around the sort of 20 to 21 months on the design and build. So as long as the client has a robust set of ERs and knows what they want in terms of capacity, who the target tenant is, they may already be in discussions with that tenant. Hopefully the project will be 21 months from appointment. For a G plus one, g plus two structure, a lot of the big equipment, like generators, can be up to a 60-week lead time. Things were around 72-week lead time. That's come down again now.

Speaker 2:

There was also a shortage of the fans which are in the cooling units, the chillers. We were having equipment delivered to site with missing the fans because the supply didn't want to wait for the fans to be shipped to Italy, install them, then ship it all the way to the Middle East. So we said, well, just ship the box to the Middle East, get the fan directly here and install it on site. So there's little things like that you can do to sort of help. But yeah, typically 21 months is what we're seeing on the design and build.

Speaker 1:

I want to just hang on to that point you made about the high level of MEP content versus Sybils, if you like. How do you in your opinion, how do you think that affects what the structure of a project team should look like? Who do you think should lead that delivery team?

Speaker 2:

Absolutely be MEP led and all the successful projects are at the moment the contractors who have taken that stance. It needs to be designed from inside out. Data centers are typically quite boring structures. They're almost like a big car park. They're not fancy. Some recent ones that have some fancy for start, given the area. They're in Dubai. Beyond that they're quite simple structures. Quite a lot of weight loading, support for the rack, so we're up at sort of almost 2000 kilograms of meter square on the slab and things like that. So it has to be led by the MEP, otherwise we need to. The civil part should be over within four months. Four to five months. You want Sybils to be finished and by that time some of the equipment started arriving. And then you just want the civil to come in to do the final sort of paint and buy a seal and make it look all nice at the end Once the MEP guys are bashed around and drilled holes everywhere.

Speaker 1:

So is critical finding the right MEP companies. Yes, that sounds a bit To do that. Yeah, sure, in terms of you know, these facilities get built, the programs are very tight and they're to strict design guidelines on, and so forth. What happens in terms of any let's call it future proofing? How do the data center operators plan for future scalability or any flexibility to meet any future growth requirements that they might have put on them?

Speaker 2:

This is a good question, john, but also a very difficult one and one that many of our clients always state as the brief that they want to be future ready. They want to have flexibility to meet, to meet this requirement and that requirement, or if that changes. It's almost like saying I want to build a hotel but I want it to cater for five-star, four-star, three-star. I want to have 100 double rooms and 20 suites, but I might want to change to 40 suites and 50 double rooms. Well, the building can't be built until we define those key things, because you can't go one shoe fits all.

Speaker 2:

Technology is moving very fast, not from the MEP aspect that supports the IT. It's the IT that's moving very quickly, mostly on the sort of density and that's per-rack cabinet, how much compute clients are putting in there. I think about 10 years ago the average density would have been each rack around one to two kilowatts. The average now we're designing for around 11 to 12. Outside of UAE, in Asia, we're doing around 15 for some clients. We do have clients actually here in UAE who are doing AI projects and that's at 20 kilowatts a rack it's. How far is that going to go and when are we going to move to. This is all air cooling, so traditional cry units or fan walls. Liquid cooling is a technology that's been around for over a decade, but we're still yet to see it becoming more mainstream. I know a lot of the crypto community are using it because of the high density for that type of computing, but then there's a lot who are just sticking over the containers in the desert and running things like that with just normal cooling. It's a challenging one and also given the fact that the project duration from if you think when a client says, right, we're going to build a data center, there might be a six months of deciding what's our employer's requirements and fixing on the types of technology, types of customer, then they're going to go to build it, which is another 21 months. You're over two years. In that time frame you can expect that IT systems will be changed. Typically, it is switched out after three years. So many people switch out the servers after three years.

Speaker 2:

How do youÖ, how do you balance building something that works for now without expending too much capex but gives you that bit of flexibility? So what we say is that Say the data for you, design data for five megawatts. Right, that data was five megawatts. Whether you've got it in a thousand Thousand racks at five kilowatts or you've got five hundred racks at ten kilowatts, it's five megawatts and you can do things like putting provisions in the chilled water system to potentially connect Liquid cooling and things like that. So that can all be done. But there's a cost to it. Flexibility come with the cost and Right now, as the market is maturing here with a, say, two or three main players, there's a drive from the clock in the end tenants to push the, push the leasing costs down the numbers which they're more used to seeing in Europe, which is a challenge here because we've got the harsher environment and equipment is oversized to handle that. So it's gonna it's gonna cost more here than it would do in Europe.

Speaker 1:

I want to come. I want to come back to that sustainability issue in a minute actually before before we get to that, though, you've mentioned In some of your comments about you know names that everybody would know the microsofts and the amazons and those sorts of people Do you? Do you see any? Do you see? Are you seeing any new entrance coming into the market? You put it, I'm thinking particularly local, eme, middle East, middle East based companies. Are there any new companies entering or is it just those Two or three or four or whatever is global?

Speaker 2:

No. So you've got the external hyperscalers and cloud players and then you've got a local company like the Abu Dhabi based company g42. We have their own cloud and ai ai platform and so the tease in Abu Dhabi. But obviously they're now a big global, global Um player. It's been many recent news announcements of um Partnerships that they've done with um. What the likes of microsoft and open ai Um. So they're really being a big driving horse, driving force um within the ua and externally um, which here reflects the government's desire to Drive and push for the, you know, digitization and embracing new technologies and ai specifically.

Speaker 1:

And I want to just come back before I forget about. I want to come back to this sustainability or or energy usage issue. John, everybody, I think, accepts the fact that data centers do use an awful lot of Um, energy power, calling, so on and so forth. Is it, is anything being done to to sort of improve the energy efficiency? I mean, you mentioned water cooling just now um, to, to, to improve that, that situation? And and I guess Second part of the question is what role is sustainability and and green technology, if you like, playing within this data center market?

Speaker 2:

Yeah, so it. Sustainability is always one of the first first things that we have on the rfp Do we have from customers is you want the data center to be sustainable? Um, there's, there's two aspects of sustainability. There's. The first part is but you look at the design. Are we embracing sustainable design principles by elevating temperatures so that we can get free cooling and reducing the amount of electrical load from, say, the chiller plant and things like that? And are we? You know, I mean 10 years ago, data centers? You'd walk in and you'd need a jacket. It was cold, but now the rooms are, is 25 degrees or 27 degrees. So the more efficient you can be inside, the more efficient you can be outside.

Speaker 2:

The second part of sustainability is actually, where is your supply chain coming from? Okay, so if we're, if we're importing lots of uh equipment and things from the us, that's not very sustainable. You have to look at your carbon footprint, end to end, really. So you want to be looking at local, local materials, a local supply chain or a little bit closer to home, and not Air freighting things or shipping things from halfway around the world, because of all that does play the part of it. Um, it's come to a point where you can't really with this metric of PE power usage effectiveness, which a lot of facilities are sort of judged by. But we're coming to a stagnation point and I think the recent time market study PE numbers are actually going up on average. I think part of that okay, there might be an aspect of global warming, but also because now their survey includes a lot of emerging markets or places like the Middle East, which previously didn't work part of the survey, but now we've got a certain amount of facilities here and places like India and RTA, singapore, indonesia, where climate is warm, so they're being included in the survey and, yeah, you can't get as efficient as you would do if you're in Finland, and that's just something that we have to deal with.

Speaker 2:

One good thing that we're seeing from some of the large tenant, hyperscale tenants is the flexibility in that data hall space to raise temperatures up to even 32 degrees for a period of the year.

Speaker 2:

So this would account for when either the facilities undergoing some maintenance and you haven't got all the equipment operational or there's, say, a failure of the utility power and you're waiting for the generators to go on. This is when temperatures can kind of spike, when you're waiting for systems to restart. So if we've got that flexibility, we don't have to design as many provisions in to account for these failure or maintenance scenarios and we can let temperatures drift up for five or 10 minutes and then it'll come back down again and the operator won't get penalized. So it has to be driven from the end user, because they're the ones specifying these temperature ranges that the operator has to stay within, and it's been encouraging to see that being done here. But again, the operators operation team need to have confidence as well and some of them that they still want to keep it within the familiar range that they're used to, more from a comfort factor. But things slowly changing.

Speaker 1:

Okay, okay, good, now it's crystal ball time. What are your predictions for the future of the Middle East data center market over the next five, I'll say five to 10 years? I don't know how easy it is to do predictions over 10 years at the moment, particularly in this subject, but both in terms of where you see things going from a technology point of view, which you've already touched on already, but also the market itself. Do you see that market continuing to grow? Is it stabilizing? Where do you see it going?

Speaker 2:

No, from everything that we're involved in and discussions we're involved with on the operator side and also the end user side In the UAE, we've got growth for the next five years without a doubt. Why the GCC Saudi market is still coming up with their data centers and the big cloud players, that sort of just they're making public announcements but things aren't actually happening on the ground. There's no discussion. So once they actually do we'll see quite a lot of activity. Just an example just in the UAE alone we're involved in around 208 megawatts of projects. So that's just us alone, and there are two, three other insultants who are in this sector as well. So they've also got a number of projects. Just sort of translating it out into a population size which is a driving factor for data center requirements with the UAE in Saudi. So you can see there's easily going to be a three to four times growth on that from what we see in the UAE, especially as Saudi has the West, central and East regions as well which will have the sort of hubs and have a number of facilities in them. So the wider GCC for the next decade, without a doubt, uae five years. I mean we're talking already now with clients on projects which are going to be finishing in 2026. And we've got that crystal ball which we're talking to them about that now and those projects are going to get locked in and secured. So, from a visibility perspective, it's really good for us as a business, and also the industry, to know that that demand is there.

Speaker 2:

And also we have just briefly touched on AI. So all of the current facilities being built at the moment are for cloud services. Speaking to one of the market leaders for these services, they've said look, you know, you know what we're doing as a president and that's just for our cloud. We're predicting the same again of capacity for our AI as a minimum. I think three months ago the data center developer came out saying three times the amount of capacity. More recently, someone's come out and said two times the capacity of cloud will be required for AI. So, even being conservative at one time, that's a significant amount of investment and development into new assets.

Speaker 2:

And one thing that a lot of people are surprised at, that they're also forgetting that a lot of the current facilities which are five plus years older are now becoming legacy facilities and they can't support next generation IT, so those need to be refurbished, which is a whole other sort of avenue of cap expending, because a lot of these facilities are in really good locations. They're established, they've got good road power connectivity and all these things, so the operator's not going to suddenly go. I will just build somewhere else. You know you're going to rejuvenate and refresh that asset. Now our company in the UK has seen that in Docklands.

Speaker 2:

We're seeing that a lot now across parts of Europe where there's actually local governments have said that there's too many data centers here and they're not letting big operators build new ones or they're not giving them the power to these new plots. So what are they doing? They've got nice plots in the center of the city. They're redeveloping the asset, adding life to it. They're centre-life's about 10 to 15 years on the MEP equipment before we need to do a refresh now. Fortunately in the Middle East everything's under that. But in five years there will be legacy facilities which are going to be undergoing the upgrade cycle, which prevents new opportunity for all the supply chain in the sector.

Speaker 1:

Particularly the MEP side of it. Yes, so the summary of that? I mean that's a very comprehensive answer. The summary of it really is that anybody I guess anybody that's not already in the sector that's maybe thinking about it and not quite sure of whether there is still going to be a future for it. It isn't over by the sound of it. It isn't saturated or oversupplied, so anybody that has got half an eye on it as a sector should be comforted that there's going to be a significant future for it moving forward. So, yeah, that's encouraging, john. Look, thank you for that. Thank you for your comprehensive answer. As I say, that's my pleasure.

Speaker 1:

As always happens on these podcasts, time has beaten us and sadly our time is up, but it's been hugely informative and interesting to chat to you. So thank you for that. But before I let you go, one thing that we like to try and do on these podcasts is to leave the listeners with a takeaway or a nugget of information or a key message or something along those lines. If you were to offer a piece of advice, what would it be? I guess, particularly perhaps the businesses, looking, as I said just now, to either build on their existing experience or to start entering the data center market. What would it be?

Speaker 2:

I have to relate to what's been successful for us as a business and that sort of specialism and focus. It's really been a paramount to our success, having that sort of inch wide, mild, deep service portfolio offering for the data center projects, from early design, feasibility, detailed design, supervision and testing, commissioning, and just really holding our skill to be the best at what we do. And clients appreciate that now, especially when the end tenants are the big cloud giants who are the market leaders in what they do and they're building their own facilities outside of the Middle East and Western Europe, north America. So when you're having discussions with these types of people you really have to be at the top of your game and be in it, because it's very evolved quite quickly, different trends and if you're out of it for a prolonged period or you're dipping onto something else which is not related, you can quickly be sort of sidetracked and not be up to date with what's going on. So it's having that specialism.

Speaker 1:

Sorry, I love that expression that you used actually about being focused. What was you said?

Speaker 2:

Inch wide, mild deep.

Speaker 1:

And as a perfect way of explaining being focused on something. So, yeah, very, very good, very good, john, as I say, time has beaten us. It's been fantastic to talk to. I always get blown away by some of the numbers and statistics and trends about where this whole data thing's going. So thank you for all of that. Thank you for joining us.

Speaker 2:

Thank you, John.

Speaker 1:

All I can say is good luck in the future for you personally and also, sugglos, in all the stuff you're going to be involved in moving forward. So again, john, thank you very much indeed.

Speaker 2:

Thanks a lot, John. Have a good day.

Speaker 1:

Cheers, john, thank you. So that brings us to the end of this episode of the Middle East Construction and Real Estate podcast. Thank you for listening. We hope you enjoyed it and found it informative and interesting. If you did, please like, subscribe or share on our LinkedIn or Instagram page. A big thank you also to the team behind the scenes who do all of the real work in getting these podcasts prepared and posted for you to listen to. If anyone is interested in sponsoring a future episode, or if you have suggestions for future topics or speakers, please contact us via any of our social channels. Further episodes will be coming out in the near future. So again, please like, subscribe on any of our channels to listen to future episodes. Thank you, until next time.