Published: 2026-08-22
Water security has become the Gulf’s next big infrastructure bet. Middle East states spent USD 53.4 billion on desalination capacity between 2006 and 2024, which is 47.5% of everything the world invested in the sector, and a further USD 26 billion is expected through 2028, according to figures reported by The National on 2026-08-22. The driver behind the new wave is not population growth alone: it is artificial intelligence. The UAE’s AI sector is projected to need around 61 billion litres of water a year by 2030 to cool its data centres, while AI-related investments announced in the country reached AED 543 billion (USD 147.9 billion) across 2024-2025. Desalination has moved from a utility question to the foundation of an industrial strategy.
Why AI runs on water
Every large AI cluster is, among other things, a heavy water consumer. A typical data centre uses about 300,000 gallons of water a day for cooling, and the largest campuses take up to 5 million gallons daily. The Gulf is building at exactly that scale. In Abu Dhabi, the Stargate UAE project is designed as a 1 gigawatt AI supercomputing campus valued at more than USD 30 billion. Saudi Arabia has allocated USD 40 billion to artificial intelligence, and electricity demand from its data centres is growing at about 29% a year.
Cooling technology is improving fast: modern liquid cooling solutions can cut a data centre’s water use by up to 90%. Yet the regional build-out is so large that efficiency gains reduce, but do not remove, the underlying need for new supply. That is why water infrastructure now appears in the same investment conversations as chips, power plants and fibre.
The investment pipeline: from Shuweihat to Ras Al Khair
Annual desalination investment in the Middle East is forecast to rise from USD 5.28 billion in 2023 to USD 8.43 billion by 2030, and installed capacity in the region should reach 41 million cubic metres a day by 2028. Flagship plants anchor the programme: the Shuweihat complex in Abu Dhabi and the Ras Al Khair power and desalination plant in Saudi Arabia are among the largest facilities of their kind in the world. Around them, data centre operators and investors are lining up capacity, from Abu Dhabi’s Khazna to Saudi Arabia’s DataVolt and Alfanar, Qatar Investment Authority’s Qai unit, Microsoft and KKR, while Saudi Arabia’s Humain platform builds out national AI infrastructure.
| Indicator | Figure |
|---|---|
| Middle East desalination capex, 2006-2024 | USD 53.4 billion (47.5% of global) |
| Additional spend expected through 2028 | USD 26 billion |
| Regional desalination capacity by 2028 | 41 million cubic metres a day |
| Annual investment, 2023 to 2030 | from USD 5.28 billion to USD 8.43 billion |
| UAE AI sector water demand by 2030 | about 61 billion litres a year |
| UAE AI-related investments, 2024-2025 | AED 543 billion (USD 147.9 billion) |
A structural constraint, managed deliberately
The regional context explains the urgency. About 83% of the Middle East already faces severe water scarcity, and the region holds only 2% of the world’s renewable freshwater. The World Resources Institute estimates that by 2050 the entire population of the region will live with acute water scarcity. The UAE covers roughly 40% of its water needs through desalination, while Kuwait and Oman rely on it for about 90%. Populations keep growing too: the UAE is projected to expand from 11.5 million people at the end of 2025 to 15.3 million by 2050, and Saudi Arabia from 37 million to 47.7 million.
“Water scarcity is a reality. It’s not something new. It’s something our people have lived with for decades and decades,” said Abdulaziz Alobaidli, director general for regulatory affairs at the Abu Dhabi Department of Energy. The response, visible in the numbers above, is to treat water the way the region treats energy and logistics: as base infrastructure that must be in place before industrial demand arrives.
What the water build-out means for business in the UAE
For companies, the significance of these investments is that they are platform spending, not one-off projects. The UAE aims to lift its industrial sector’s contribution to the economy to AED 300 billion by 2031, up from AED 133 billion in 2021, and reliable water, power and cooling are preconditions for that target. Businesses in AI, cloud, manufacturing and food processing that choose the UAE are effectively buying into utilities capacity that is being built ahead of demand.
The water programme is also a market in itself. Engineering firms, membrane and pump suppliers, operations contractors and water-tech startups all sell into a pipeline that adds USD 26 billion of projects through 2028. International suppliers entering this market typically start by registering a UAE company to contract with utilities and developers locally, and by opening a corporate bank account to receive project payments in AED and USD.
The pattern mirrors what the Emirates have done in other sectors: build capacity first, attract industry second. We covered the same logic in transport in our review of the UAE’s multimodal logistics hub, and on the capital side in the analysis of Gulf sovereign funds’ positions in Anthropic ahead of its IPO.
Key takeaways
- USD 53.4 billion went into Middle East desalination in 2006-2024, 47.5% of the global total, with USD 26 billion more expected through 2028.
- Regional capacity should reach 41 million cubic metres a day by 2028; annual investment rises from USD 5.28 billion (2023) to USD 8.43 billion (2030).
- The UAE’s AI sector alone will need about 61 billion litres of water a year by 2030; a typical data centre consumes 300,000 gallons a day.
- The UAE relies on desalination for about 40% of its water, Kuwait and Oman for about 90%.
- Water spending underpins the UAE’s target of an AED 300 billion industrial sector by 2031, and creates a large market for suppliers and contractors.
How Atlant Capital can help
Atlant Capital advises international companies entering the UAE market, including suppliers to infrastructure, technology and industrial projects. We handle company setup in mainland and free zones, corporate bank account opening, and residence visas for founders and staff, so that your team can focus on contracts rather than paperwork. Write to us to discuss a market-entry structure that fits utility and government-linked procurement.
FAQ
How much are Gulf states investing in water security?
Middle East states spent USD 53.4 billion on desalination between 2006 and 2024, which is 47.5% of global investment in the sector. A further USD 26 billion is expected through 2028, taking regional capacity to 41 million cubic metres a day. Annual investment is forecast to grow from USD 5.28 billion in 2023 to USD 8.43 billion in 2030.
Why do AI data centres need so much water?
Data centres use water mainly for cooling. A typical facility consumes about 300,000 gallons a day and the largest campuses up to 5 million gallons. The UAE’s AI sector is projected to need around 61 billion litres a year by 2030 as projects such as the 1 gigawatt Stargate UAE campus come online. Liquid cooling can cut water use by up to 90%, but total demand still grows with the scale of construction.
How dependent are Gulf countries on desalinated water?
The UAE covers about 40% of its water needs with desalination, while Kuwait and Oman rely on it for roughly 90%. The region holds only 2% of the world’s renewable freshwater, and 83% of the Middle East already faces severe water scarcity, so desalination is the backbone of supply.
What does the water build-out mean for businesses in the UAE?
It signals long-term platform investment: utilities are being built ahead of industrial and AI demand, supporting the UAE’s target of an AED 300 billion industrial sector by 2031. It also creates a direct market for engineering, equipment and water-tech suppliers, who usually enter by registering a UAE company and opening a local corporate bank account.
