OpenAI has not yet signed a lease for about 20% of the capacity of its planned giant AI complex in Abu Dhabi, after attacks on American data centers in the region sharply increased security concerns about such projects. This is reported by The Wall Street Journal, citing people familiar with the negotiations.
The project in the United Arab Emirates was presented as one of the most ambitious artificial intelligence infrastructure initiatives in the world. The plan calls for a complex with a capacity of around 5 gigawatts, and OpenAI was announced as a key future tenant. According to the WSJ, it was the geopolitical risk and vulnerability of such facilities that delayed the finalization of the contract.
This is an important signal for the real estate market. Data centers are no longer niche technical facilities, but one of the most expensive classes of specialized real estate assets. In the case of AI infrastructure, the scale is even greater: according to the WSJ each 1 GW of capacity can require an investment of at least $50 billion in servers and infrastructure. This means that for a 5 GW complex, we are talking about assets and equipment worth hundreds of billions of dollars.
That is why the issue of security can now directly affect the value of land, the cost of construction, insurance conditions and leases.
Underground data centers and protection from drones
Following the attacks, UAE authorities are already considering changes to the way future complexes can be designed.
Among the solutions being discussed are a more dispersed deployment infrastructure, underground facilities, blast-resistant structures and drone protection systems. Such options are being considered in the wake of the AWS attacks.
However, this means a significant increase in construction costs.
For a traditional logistics or office project, additional security costs are a limited component of the investment. In an AI data center, where the total cost can reach tens of billions of dollars, security requirements can change the economics of the entire project.
In addition to construction costs, insurance prices, security costs and financing conditions may also increase. Banks and institutional investors are likely to demand a higher risk premium for projects located in geopolitically sensitive areas.
How this could change the land market
The new risk could also have a direct effect on land values.
In recent years, land around major energy centers and telecommunications routes has become one of the most sought-after assets for building data centers. In AI infrastructure, the key resource is no longer square footage, but access to electrical power.
However, if companies start requiring larger secure perimeters or dispersed campuses instead of huge concentrated complexes, this could also change the demand for land.
Instead of one giant site, investors may prefer several smaller locations located at a considerable distance from each other. This would increase the demand for suitable industrial land, but would make network and energy infrastructure more expensive.
The Persian Gulf remains attractive
Despite the new risks, big tech companies are not giving up on the region. Amazon and Microsoft are continuing their plans for new data centers in Saudi Arabia, showing that the Gulf states’ advantages – cheap energy, government support, available land and quick permitting – remain significant.
Global demand is also continuing to grow. Microsoft, for example, plans to increase its data center capacity to about 38 GW by 2032, more than three times the current level, according to information cited by Reuters.
This means that geopolitical risks are unlikely to stop the data center boom, but they could change the way they are built and valued as real estate assets.
A new class of real estate with a new type of risk
The OpenAI case shows how different the industrial real estate market is becoming in the age of artificial intelligence. In a traditional office, the main risk is whether there will be enough tenants. In data centers, this risk is added by access to huge amounts of electricity, cooling, cybersecurity, the geopolitical environment and now - physical protection from military attacks. This could lead to higher construction costs for new projects and much greater differences in value between locations.
If the OpenAI contract in Abu Dhabi remains frozen, it will also be an important signal to other investors: in AI infrastructure, location will no longer be evaluated solely by the price of land and electricity, but also by the state's ability to physically protect the asset.
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