The Israel data center colocation market size was valued at USD 145 million in 2023 and is expected to reach USD 265 million by 2029, growing at a CAGR of 10.57% during the forecast period.

Israel Data Center Rack Market is Segmented by Rack Size (Quartely Rack, Half Rack, Full Rack), Rack Height (42U, 45U and More), Rack Type (Cabinet (Closed) Racks, Open-Frame Racks, Wall-Mount Racks), Data Center Type (Colocation Facilities, Hyperscale and Cloud Service Provider DCs, Enterprise and Edge), Material (Steel, Aluminum, Other Alloys and Composites). The Market Forecasts are Provided in Terms of Value (USD).

Israel Data Center Construction Market size was valued at USD 1.35 Billion in 2024 and is expected to reach USD 3.75 Billion by 2032, growing at a CAGR of 13.6% from 2026 to 2032.

Key Market Drivers:

Growing Demand for Cloud Services: The Israel Data Center Construction Market is driven by the growing demand for cloud computing services, with the market expected to reach USD 1.2 billion by 2025. This shift towards cloud-based infrastructure across industries is causing a demand for more data centers to provide scalable, secure, and reliable services. As international cloud providers like AWS, Microsoft, and Google expand their operations in Israel, the demand for local data centers continues to grow.

Government Support for Digital Transformation: The Israeli government is investing over USD 2 billion in digital infrastructure by 2025, aiming to improve digital infrastructure across the country. This investment is aimed at supporting growing demand from both public and private sectors, particularly for data centers offering secure, high-performance services that align with national digitalization efforts. The government's support is creating a favorable environment for data center construction.

The Israeli data center market, fueled by robust economic growth, a thriving tech sector, and increasing cloud adoption, is experiencing significant expansion. While precise market size figures for 2019-2024 aren't provided, a logical estimation, considering the global data center market's growth trajectory and Israel's position as a regional tech hub, suggests a substantial increase over the past five years. The Tel Aviv hotspot, a major center for innovation and investment, contributes significantly to this growth, attracting hyperscale operators and colocation providers. The market is segmented by data center size (large, massive, medium, mega, small), tier type (Tier 1 & 2, Tier 3, Tier 4), and end-user sectors, with BFSI, cloud providers, e-commerce, and technology companies being key drivers. Growth is also driven by government initiatives to improve digital infrastructure and the increasing demand for resilient and secure data storage solutions. The market faces constraints such as limited land availability in prime locations like Tel Aviv, high energy costs, and competition from neighboring countries. However, the ongoing investment in renewable energy sources and the strategic importance of Israel's location are mitigating these factors to a degree. The forecast period (2025-2033) anticipates continued expansion, with a projected CAGR (assuming a reasonable CAGR of 15% based on global trends and Israel's growth) contributing to a considerably larger market by 2033. The increasing adoption of edge computing, the expansion of 5G networks, and the rise of the Internet of Things (IoT) will all contribute to market growth in the coming years. The diverse range of companies operating within the sector, encompassing both international players and local providers, further underscores the dynamic and competitive nature of the Israeli data center market. This competitive landscape is likely to result in innovations and improved services, accelerating overall market expansion. Recent developments include: July 2022: Berkshire Partners announced to pay more than USD 215 million to acquire 49% stake in MedOne. The company was evaluated at NIS 1.5 billion (USD 430 Million).August 2021: EdgeConneX announced its agreement to acquire Global Data Center (GDC), an Israeli data center operator based in Herzliya district. Once completed, the acquisition would bring two new facilities into the EdgeConneX global data center platform, including GDC’s highly secure underground facilities in Herzliya and Petah Tikva, near Tel Aviv.August 2020: Bynet Data Communications was building an underground data center for Oracle Corporation in Jerusalem, Israel. The facility was a 14,000 sq m (460,000 sq ft) bunker located below five parking levels and a 17-story building in the city’s Har Hotzvim tech hub. The data center would extend over four floors at 50 meters (160 feet) below ground level.. Notable trends are: OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT.

The Israel Data Center Cooling Market report segments the industry into By Cooling Technology (Air-based Cooling, Liquid-based Cooling), By Type (Hyperscalers (Owned & Leased), Enterprise (On-premise), Colocation), and By End User Vertical (IT & Telecom, Retail & Consumer Goods, Healthcare, Media & Entertainment, Federal & Institutional Agencies, Other End-users).

Israel Data Center Server Market size was valued at USD 0.81 Billion in 2024 and is expected to reach USD 2.15 Billion by 2032, growing at a CAGR of 12.9% from 2026 to 2032.

Israel Data Center Server Market Drivers

"Startup Nation" Culture: Israel's reputation as a global technology and startup hub fuels significant data generation and processing needs. The high concentration of tech companies, R&D centers, and innovative startups creates a substantial demand for robust data center infrastructure.

Cybersecurity Sector: Israel's strong cybersecurity industry requires extensive data storage and processing capabilities, driving demand for high-performance servers.

AI and Machine Learning Adoption: The rapid adoption of AI and machine learning technologies by Israeli companies necessitates powerful server infrastructure for data analysis and processing.

Increased Cloud Services Demand: The increasing adoption of cloud computing services by businesses and government agencies in Israel is driving demand for data center servers.

Hyperscale Cloud Providers: The establishment of hyperscale cloud provider data centers in Israel is a major market driver, leading to increased server deployments.

The Israel data center cooling market, currently valued at $30 million in 2025, is projected to experience robust growth, exhibiting a Compound Annual Growth Rate (CAGR) of 15.40% from 2025 to 2033. This expansion is driven by the burgeoning adoption of cloud computing and the increasing demand for data storage and processing capabilities within the country. The rising number of hyperscale data centers and colocation facilities, coupled with the growth of key sectors like IT & Telecom, Retail & Consumer Goods, and Healthcare, are significant contributors to market growth. Furthermore, the shift towards energy-efficient cooling technologies, such as liquid-based cooling methods like immersion and direct-to-chip cooling, is gaining traction, driven by the need to optimize energy consumption and reduce operational costs. The market is segmented by cooling technology (air-based and liquid-based), data center type (hyperscalers, enterprises, colocation), and end-user vertical. Leading vendors like Stulz GmbH, Schneider Electric SE, and Mitsubishi Electric Corporation are actively shaping the market landscape through innovative product offerings and strategic partnerships. While regulatory compliance and initial investment costs can present challenges, the overall positive growth trajectory for the Israel data center cooling market is expected to persist throughout the forecast period. The competitive landscape is characterized by both established global players and local providers. The market's evolution will be shaped by several factors, including advancements in cooling technology, increasing government initiatives promoting energy efficiency, and the evolving data center infrastructure requirements of diverse end-user verticals. The adoption of sustainable cooling practices will be a key focus, particularly for hyperscale operators striving to minimize their environmental footprint. Consequently, the demand for energy-efficient solutions such as advanced liquid cooling systems and innovative air-cooling technologies is likely to intensify. The market’s ongoing expansion provides lucrative opportunities for companies offering cutting-edge cooling solutions tailored to the specific needs of Israel's data center market. Recent developments include: April 2024: Accelsius, known for its patented NeuCoolTM 2-Phase DTC liquid cooling systems that deliver unmatched high-performance computing and compute density for data center and edge computer operators, announced a strategic partnership with OptiCool Technologies. Together with OptiCool's active RDHx Cool Door, it aims to expedite the development of waterless, direct-to-chip liquid cooling systems, targeting a swiftly growing market.January 2024: Data center firm Aligned launched a new liquid cooling system called DeltaFlow. The liquid cooling technology is designed to support high-density computing requirements and supercomputers. It can cool densities up to 300 kW per rack. The new DeltaFlow system works simultaneously with Aligned’s air-cooled Delta technology, enabling no change in power delivery or existing data hall temperatures.. Key drivers for this market are: Government initiatives and rising demand for digitalization are propelling market growth., Increasing Cloud based businesses drives the demand for the studied market. Potential restraints include: Government initiatives and rising demand for digitalization are propelling market growth., Increasing Cloud based businesses drives the demand for the studied market. Notable trends are: The IT and Telecom Segment is Expected to Hold a Significant Market Share.

Israel Hyperscale Data Center Market Report is Segmented by Data Center Type (Hyperscale Colocation, Enterprise/Hyperscale Self Build), by Service Type (IaaS ( Infrastructure-As-A-Service), Paas ( Platform-As-A-Service), Saas( Software-As-A-Service)), by End User (Cloud & IT, Telecom, Media & Entertainment, Government, BFSI, Manufacturing, E-Commerce, Other End User).

The Middle East data center market is experiencing robust growth, driven by the region's burgeoning digital economy and increasing cloud adoption. Factors such as government initiatives promoting digital transformation, rising e-commerce activity, and the expansion of 5G networks are significantly contributing to this expansion. The market is segmented by data center size (large, massive, medium, mega, small), tier type (Tier 1 & 2, Tier 3, Tier 4), absorption rate (utilized vs. non-utilized), colocation type (hyperscale, retail, wholesale), and end-user (BFSI, cloud, e-commerce, government, manufacturing, media & entertainment, IT, and others). While precise market size figures aren't provided, assuming a conservative CAGR (let's assume 15% based on industry averages for emerging markets) and a 2025 market value in the hundreds of millions (let's estimate $500 million USD for illustrative purposes), the market is projected to surpass billions of dollars by 2033. This rapid growth is particularly concentrated in key markets like Saudi Arabia and the UAE, which are strategically investing in infrastructure and attracting significant foreign investment. However, challenges remain. High infrastructure costs, limited skilled workforce availability, and potential regulatory hurdles pose restraints to market growth. To overcome these challenges, the region needs to invest in developing robust talent pipelines, streamlining regulatory processes, and exploring innovative cost-effective solutions for data center construction and operation. The competitive landscape features both regional and international players, suggesting a dynamic environment ripe for consolidation and strategic partnerships in the coming years. The shift towards hyperscale colocation is notable, underscoring the increasing demand for large-scale data center capacity. Continued focus on energy efficiency and sustainability is also crucial in a region facing climatic challenges. Recent developments include: October 2023: Mohamed bin Ali bin Mohamed Al-Mannai, minister of communications and information technology, has launched the M-VAULT 4's fourth data center building. Customers in Qatar can access cloud services through the Microsoft Cloud data center region housed in the new data center facility.October 2022: The prominent network of hyperscale data centers in the Middle East and North Africa region, a joint venture between Khazna Data Centers, and Masdar and EDF have inked a deal to build a ground-mounted solar photovoltaic (PV) plant to power Khazna's new data center in Masdar City.October 2022: The company announced the development of DXB2 and DXB3 with a joint capacity of 43 MW of IT load. The DXB3 facility is an extension of an existing facility transferred to Khazna following the strategic partnership between G42 and e&.. Notable trends are: OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT.

Israel Data Center Cooling Market size was valued at USD 34.71 Million in 2024 and is projected to reach USD 111.46 Million by 2032, growing at a CAGR of 15.7% from 2026-2032.

Israel Data Center Cooling Market: Definition/Overview Data center cooling refers to the systems, technologies, and processes that regulate temperature, humidity, and airflow in data centers to prevent overheating and ensure peak performance of IT equipment. These systems use air cooling, liquid cooling, and free cooling to remove heat from servers, storage devices, and networking hardware. Applications include maintaining equipment reliability, optimizing performance, lowering latency in computer processes, and guaranteeing energy efficiency in facilities that serve key operations like cloud computing, AI processing, and data storage.

Colocation providers have become essential for the finance and manufacturing sectors as they navigate the uncharted seas of digitalisation. These companies are grappling with jumping desires for data storage, fuelled by remote work and advanced digital products. Colocation providers have expanded their vessel size by adding more data centres to their fleet to quench this demand. The COVID-19 outbreak was an unexpected benefactor — during lockdowns, the pivot to an online existence spurred interest in cloud services, escalating industry revenue as requests for colocation facilities flooded in. This trend has continued as hybrid work models emerge as a dominant force shaping the job market, creating further ripples of heightened demand for data housing. Over the five years through 2024-25, colocation facility revenue is expected to grow at a compound annual rate of 3.6% to reach £2.8 billion, including forecast growth of 2.8% in 2024-25. Supply chain disruptions, international conflict-induced energy price spikes and Brexit-imposed border checks have wreaked havoc on operational costs and hindered growth. In response, providers like Equinix have pumped money into expanding operations, while others are considering switching to local suppliers. Despite these challenges, the rise in online activities that would benefit from cloud services, including escalating reliance on AI systems from the financial services sector, has boosted revenue growth. Repercussions of the Russia-Ukraine conflict contributed to staunch energy costs, and supply chain disruptions added to the burdens. Natural gas prices spiked in August 2024, according to the Agriculture and Horticulture Development Board, primarily due to geopolitical tensions, including the escalation of the Israel-Hamas war and concerns over potential supply disruptions at the Russian-Ukrainian border due to the ongoing conflict. However, thanks to new UK suppliers, energy prices are set to stabilise in 2024-25, aiding profit. Over the five years through 2029-30, the Colocation Facilities industry's revenue is slated to climb at a compound annual rate of 3.4% to reach £3.3 billion. The bank rate is set to remain elevated in the short term, although it is falling, as pains from high inflation and the heightened cost of living remain. This will ramp up the cost of borrowing, making colocation facilities an attractive alternative to establishing costly in-house operations. Technological innovation will continue to gather momentum as colocation facility providers take a more customer-centric approach through greater flexibility, sustainability and security.