Desert and Rainforest — Why Abu Dhabi and Johor Bahru Became AI Hubs at the Same Time

Personal analysis. Not investment advice. Data from public sources, Knight Frank, company announcements, and US/UAE/Malaysia government releases. March 2026.

The two cities have almost nothing in common. One is a desert oil state. The other is an equatorial multi-ethnic nation. Yet both became major destinations for global AI data center investment at the same time — and still are.

Why did the same thing happen in such different places? And below the surface, what is actually different?

The shared logic: both absorbed overflow demand

JB's growth came from Singapore's moratorium. When Singapore effectively stopped approving new data centers in 2019, demand redirected to JB, one kilometer across the causeway.

Abu Dhabi's rise has a similar story. Dubai's premium areas have rising land costs and zoning limits. Abu Dhabi offers purpose-built development zones — KEZAD and Masdar City — where state-backed entities bundle land, power, and infrastructure together. This makes it easier to build large AI campuses.

The investment dynamic was also different from JB in one important way. It was largely the UAE side — Sheikh Tahnoon bin Zayed and G42 — that actively courted US hyperscalers, and the US that responded. The result was Stargate UAE: a joint venture between G42, OpenAI, Oracle, Nvidia, and SoftBank, announced in May 2025 with both the UAE president and Donald Trump present. The planned capacity is 5GW — larger than JB's entire pipeline of 3.4GW.

Both cities were shaped by the same two forces: limits at nearby established hubs, and active efforts to attract investment.

The key difference: the type of geopolitical risk

Both cities face “US-China tension” as a risk. But the type of tension is very different.

Abu Dhabi chose a side.

G42 sold all its Chinese investments in 2023 and 2024. It removed an estimated $1.7 to $2 billion worth of Huawei equipment from its data centers and sold its stake in ByteDance. This was a direct response to US government pressure — a loyalty test. In return, the US approved exports of up to 500,000 advanced NVIDIA processors per year to the UAE.

The Stargate UAE campus is designed for US hyperscalers, with strict KYC protocols to control access. This is different from the broader UAE market: Alibaba Cloud runs a data center region in Dubai, and Huawei has cloud infrastructure in Saudi Arabia. Stargate UAE is one facility in a region where Chinese operators also have a presence — it is not a China-free zone across the UAE.

Malaysia is trying not to choose.

The Malaysian government welcomes investment from both sides. Former deputy minister Ong Kian Ming has publicly said JB is open to both US and Chinese tech companies. Prime Minister Anwar keeps a non-aligned position. That openness has brought pressure from both directions: the US looked at Malaysia as a possible GPU diversion route to China, and when Malaysia worked with US oversight requests, China criticized it for taking sides.

Neither position is clearly right. But the risks are different. Abu Dhabi's risk is focused: if its relationship with the US breaks down, the whole model fails. Malaysia's risk is spread out and ongoing: either side can push at any time.

Physical war risk

In late February 2026, the US and Israel launched strikes against Iran.

Abu Dhabi's data center infrastructure now faces real military risk. The UAE intercepted 165 ballistic missiles, two cruise missiles, and 541 drones over two days. Thirty-five drones and five projectiles got through, hitting Jebel Ali Port and buildings in Dubai. An Amazon data center in the UAE reportedly caught fire during the strikes.

“It is cheaper to attack than to defend.” That is the reality of the conflict.

JB has no equivalent physical military risk. The geopolitical pressure is real, but missiles are not flying toward Johor. For long-term infrastructure investment, that is a big difference.

Power and cooling: desert versus rainforest

Abu Dhabi is an oil and gas producer with abundant, stable power. Stargate UAE combines nuclear, solar, and gas in its energy design. Grid reliability is among the highest in the world.

The hard part is cooling. Servers generate a lot of heat. In 50°C desert conditions, cooling takes a lot of energy. This pushed Abu Dhabi toward liquid cooling, reclaimed water systems, and seawater cooling years before Malaysia faced the same problem. The Middle East dealt with the “stop using drinking water for cooling” issue a decade before JB is dealing with it now.

JB sits on the equator. It is not as hot as Abu Dhabi, but high humidity reduces how well air cooling works. Power comes from TNB's grid, and whether supply can keep up with the 3.4GW pipeline is still uncertain.

For available energy, Abu Dhabi has a clear advantage.

Infrastructure depth: what is buried underground

In a previous piece about Abu Dhabi, I wrote about what I found when I looked into the facilities near Al Reem Island that I had walked past many times without thinking about.

The STEP sewage tunnel runs 41 km at depths up to 105 meters. It runs on gravity alone, with no pumping stations along the way. A power outage does not stop it. The Liwa aquifer storage project — the world's largest desalinated water ASR project — holds enough emergency supply for the entire city of Abu Dhabi for 90 days. Both were built over decades, and most residents have no idea they exist.

JB's infrastructure is not at that level yet. Water problems became visible because the systems could not handle the sudden jump in industrial demand. Bridge DC is building a reclaimed water plant, AirTrunk is deploying liquid cooling, Microsoft is designing zero-water-evaporation facilities. These are real improvements. But they are starting in 2024 and 2025. Abu Dhabi's infrastructure depth took decades to build.

What each city is actually building

This may be the most fundamental difference.

Abu Dhabi is trying to become an AI-producing country.

Stargate UAE, G42's Falcon (an Arabic-language LLM), Mohamed bin Zayed University of Artificial Intelligence — Abu Dhabi is not just hosting AI infrastructure. It is trying to build the ability to create AI. The data centers are a tool, not the goal. The national strategy is to use AI the way oil was used: as the base for the next 50 years of economic output.

The Stargate UAE campus includes a science park for AI innovation. The design brings together research, development, and talent training — not just compute capacity.

JB is functioning as a compute location.

JB's main role is to be a cheaper extension of Singapore. Tenants are multinationals based in Singapore; JB provides the backend at lower cost. Anwar keeps pushing for economic spillover because he knows this model, if unchanged, does not give Malaysia much in return.

Malaysia has a National AI Strategy (NAIES), and the goal to use AI for economic development is real. But the practical reality is closer to “attract AI infrastructure and get economic benefit” than “build AI.”

The post-oil bet

Looking at Abu Dhabi's AI investment only as infrastructure misses the point.

The Abu Dhabi Economic Vision 2030 was set in 2006. Its main goal: move away from oil toward a knowledge-based economy. By 2025, non-oil sectors already make up over 75 percent of UAE GDP — partly a policy success, partly a sign of how urgent the shift feels.

The AI investment is a logical next step: use oil revenues to buy the next resource. If oil was the key resource of the 20th century, compute capacity may be the key resource of the 21st. G42, Mubadala, ADIA, MGX — Abu Dhabi's sovereign capital flowing into AI infrastructure is about more than returns. It is about securing a strategic resource before others lock it down.

The Stargate UAE announcement made this clear: a facility that can reach half the world's population within a 3,200 km radius. India, Pakistan, East Africa, the wider Middle East — all within that range. JB competes on “5ms from Singapore.” Abu Dhabi is competing on “AI infrastructure hub for the Global South.” The ambition is on a different scale.

The non-aligned legacy and its limits

The UAE has long been good at not choosing sides. It is a member of the Non-Aligned Movement, joined BRICS in January 2024, keeps security ties with the US, strong economic ties with China, and close trade ties with India. This approach — staying useful to all major powers — is how a country of roughly 10 million people has had much more influence than its size would suggest.

That balance started to break under AI geopolitical pressure in 2023 and 2024.

G42 removing an estimated $1.7 to $2 billion worth of Huawei equipment and selling all Chinese investments was a direct response to US pressure — a loyalty test passed. At the same time, the UAE kept its BRICS membership, continued in mBridge (China's cross-border digital currency settlement platform), and kept economic ties with Chinese firms in other sectors. The structure being built is: technology aligned with the US, financial and economic relationships kept diverse.

Whether this two-layer structure holds depends on how much US-China competition grows. As AI infrastructure becomes a clearer battleground in that competition, the room for “both sides” gets smaller. Abu Dhabi is trying to keep its non-aligned identity while having already made the harder choice at the technology level. Malaysia's Anwar is trying the same thing with a lower level of commitment.

Neither will find it easy if the competition keeps growing.

Risk Profiles: Abu Dhabi vs JB

Abu Dhabi's strengths: State-designed stability. Oil revenues fund power and water infrastructure. Clear US alignment secures chip supply. Deep infrastructure gives long-term reliability.

Abu Dhabi's risks: Direct physical exposure to the Iran conflict. Having fully chosen a side, there is no fallback if the US relationship breaks down.

JB's strengths: The unique one-kilometer proximity to Singapore via the causeway. The ability to attract both US and Chinese investment. Malaysia's economic growth.

JB's risks: Constant US-China pressure from both sides. Power and water infrastructure still catching up. The risk of staying a “compute location” without growing into more.

Same phenomenon, different futures

Abu Dhabi started earlier — Microsoft opened Azure regions there in 2019, and the hyperscale investment wave grew through the early 2020s. JB's rapid expansion started around 2023, after the ChatGPT moment. Both pipelines now run well into the 2030s. On the surface it looks like the same story. Below the surface, the logic is very different.

Ten to twenty years from now, the difference will likely be clear. Abu Dhabi will have become a real AI-producing hub in close partnership with the US — or the long war in the Middle East will have broken that plan. JB will have absorbed Singapore's overflow demand steadily and practically — or newer competitors like Batam will have taken its advantage.

The reasons to watch both are specific: Abu Dhabi for the depth of its state-backed infrastructure and its firm US alignment; JB for the proximity to Singapore that no other city can match. Those are very different reasons — which is the point. Having lived in Abu Dhabi before, now on MM2H in Malaysia with property on Al Reem, I have had an unusually direct view of both.

Related terms: Stargate UAE, G42, MGX (Abu Dhabi AI investment vehicle), STEP (Abu Dhabi deep sewer tunnel), ASR (Aquifer Storage and Recovery), JS-SEZ, NAIES (Malaysia's National AI Strategy). Related: What I Found Underground in Abu Dhabi · UAE Solar Is Cheaper Than Qatar's Gas.