Israel Data Center Construction Market

Israel Data Center Construction Market Analysis

The Israel Data Center Construction Market size is estimated at USD 1.16 billion in 2025, and is expected to reach USD 2.12 billion by 2031, at a CAGR of 10.54% during the forecast period (2025-2031).

Robust government support, expanding cloud services, advancements in 5G technology, smart city initiatives, IoT upgrades, and a culture of digital creativity drive rapid growth in Israel's data center market. This surge is particularly evident in the rising demand for colocation and hyperscale services.

Under Construction IT Load Capacity: The upcoming IT load capacity of the Israeli data center market is expected to reach 426 MW by 2030.

Under Construction Raised Floor Space: The country's construction of raised floor area is expected to increase by 1.5 million sq. ft by 2030.

Planned Racks: The country's total number of racks to be installed is expected to reach around 76K units by 2030. Tel Aviv is expected to house the maximum number of racks in the coming years.

Planned Submarine Cables: Close to four submarine cable systems connect Israel. In 2023, a notable submarine cable, Blue, was launched. Spanning 4,696 km, it connects with landing points in Tel Aviv.

Israel Data Center Construction Market Trends

The IT and Telecom Segment is Expected to Have Significant Market Share in the Coming years

• The IT and telecom segment in the Israeli data center market reached an IT load capacity of 20 MW in 2023. It is expected to register an annual growth of 13.8% to reach a capacity of 48.3 MW by 2029. In April 2024, as per official documents, the Israeli Ministry of Defense established a dedicated "landing zone" within Google Cloud. This zone is a secure gateway to Google's computing infrastructure, enabling the ministry to store and process data and utilize AI services.
• According to a draft contract dated March 2024, the Israeli Ministry of Defense engaged Google's consulting services to improve its Google Cloud access. The aim was to enable various units within the ministry to leverage automation technologies. The contract details a billing of over USD 1 million from Google to the Israeli Ministry of Defense for these services.
• In August 2023, Amazon.com unveiled a strategic move, committing approximately USD 7.2 billion in investments in Israel, slated to span until 2037. Simultaneously, it inaugurated its Amazon Web Services (AWS) data centers within the nation. These data centers will empower the Israeli government, granting them the capability to both run applications and securely store data within Israel's borders. Yali Rothenberg, Israel's accountant general, expressed optimism, noting that the establishment of this regional infrastructure will facilitate a significant migration of governmental workloads to the cloud. This, he believes, will play a crucial role in speeding up the country's digital transformation in the public sector.
• Israel intensifies its telecom growth efforts by rolling out a 5G network. A notable milestone was reached in April 2024, as Pelephone, in collaboration with Ericsson, unveiled Israel's inaugural independent 5G network core. This venture, dubbed the MAX G5 network, was backed by an investment of around NIS 50 million.
• Such market instances create more data needs in the coming years. This surge in data storage demand is poised to elevate the need for data centers in the region, thereby bolstering the prospects of data center construction firms in the coming years.

The Tier 3 Segment is Expected to Hold the Major Share in the Country

• In 2023, there were around 16 data centers in Israel with Tier 3 certification, with a cumulative IT load capacity of 167.4 MW. Reliability and affordability are the major factors driving the demand for tier 3 data centers in the country. The Tier 3 segment is projected to register an annual growth rate of 9.1%, reaching around 327 MW by 2030.
• In 2023, Tel Aviv dominated the Tier 3 certified data center landscape, with Adgar leading the pack, boasting an IT load capacity of 107.9 MW across two facilities. Bezeq International Ltd is closely followed by 32.5 MW distributed over six facilities. Serverfarm LLC operated a single facility with a 10 MW IT load. EdgeConneX Inc. managed 7.7 MW under one facility, while other players in the market held smaller shares.
• During the study period, Tel Aviv is set to see the construction of about five data center facilities, all meticulously designed to adhere to Tier 3 standards. These strategic facilities are poised to add over 60 MW of IT load capacity to the region.
• Throughout the study period, key players plan to invest in data centers, including Digital Realty, Lian Group, and MedOne. These developments in the Israeli market are expected to amplify the demand for Tier 3 certified data centers. This heightened demand, particularly within the Tier 3 category, is expected to fuel the necessity for data center construction services in the coming years.

Israel Data Center Construction Industry Overview

The Israeli data center construction market is fairly consolidated, with significant companies such as AECOM, James L Williams Middle East., Electra Group, Electra Group, and Minrav Group Ltd.

February 2024: MedOne, an Israeli data center firm, constructed two novel underground data centers on the outskirts of Tel Aviv. These centers, spanning three underground levels, will collectively cover about 30,000 square meters (322,920 square feet). The inaugural data center, situated north of Tel Aviv, is slated for a 2026 debut, with its counterpart set to follow suit in 2027.

Israel Data Center Construction Market Leaders

Israel Data Center Construction Market News

• January 2024: The Swiss fund, Lian Group, teamed up with Europe-Israel Group and PAI to develop a NIS 400 million (USD 122.5 million) facility on a 6.25-acre plot in Afula, a city in northern Israel. The consortium acquired the land south of Nazareth for NIS 80 million (USD 24.5 million) approximately six months ago. Construction commenced toward the end of 2021, with a projected completion timeline of 2025 or 2026. The group has enlisted the services of Spector Amisar Architects.
• April 2023: EdgeConneX, in a strategic move, enlarged its data center network in south Tel Aviv, Israel. The firm is constructing its third data center in Israel, bolstering its IT capacity by 7.5 MW. Situated in Rishon, this new facility will synergize with EdgeConneX's current establishments, which span two locations in Herzliya to the city's north and Petah Tikva to the east. Collectively, these sites will amass a substantial 14.5 MW capacity.