New Investment Destination in Commercial Real Estate Market
Data center development is rapidly emerging as a new investment destination in the domestic commercial real estate market in Korea. Asset management firms, private equity firms, developers, builders and so on are entering the market monopolized by mobile carriers until recently.
According to market research firm Arizton and real estate consulting firm Colliers, the data center market of South Korea is expected to reach eight trillion won in 2027 with an average annual growth of 6.7 percent. The size was approximately five trillion won last year.
The fast growth has to do with cloud service expansion. According to the Korea Data Center Council, South Korea’s cloud IT infrastructure market is expected to exceed 2.21 trillion won in 2025 and its cloud computing market is expected to show an average annual growth of 15 percent for three years to come.
A lot of foreign data center operators are building data centers in South Korea. For example, Equinix is building two more in Seoul and Digital Realty is building one in Gimpo and will build three more by 2025. Oracle’s is scheduled to be built in Gwangyang with an area of more than 100,000 square meters.
Asset management firms are increasing investment in the market. IGIS Asset Management’s IGIS Data Center REITs attracted 25.4 billion won for investment in data center development in Hanam. Koramco Asset Management’s data center 41,213 square meters in area is scheduled to open in Seoul in 2025 based on an investment of 480 billion won. Pacific Asset Management’s project in Jukjeon is until the first half of 2025 and the Canada Pension Plan Investment Board is in the 480 billion won project.
Construction companies’ data center projects are underway, too. GS E&C, which is building one in Anyang with Actis Asset Management and Pavilion Asset Management, recently launched a subsidiary to be in charge of data center business. SK Ecoplant and Digital Edge are developing one in Incheon and HDC Hyundai Development Company and NHN are planning to develop a cloud data center in Gimhae.