Asia Pacific Data Centre Update

APAC PRIMARY MARKET - RANK #4

(SEOUL, GYEONGGI, INCHEON)

KEY INDICATORS*

330MW IN OPERATION

14 OPERATORS, 32 DATA CENTRES

592MW UC / PLANNED

4% VACANCY RATE

* Definition: Key indicators are based on operational Hyperscale Cloud, Colo, Edge & Telco data centre facilities in the market and excludes Captive & ICT.

Colo Hyperscale Cloud Telco

MARKET OVERVIEW

Previously, overlooked in comparison to other primary Tier 1 data centre markets across Asia Pacific, the South Korea (Seoul) market is now gaining international entrants in the form of major US-based data centre REITs, which have driven growth in the market since 2021. Demand is also very high from the global cloud service providers whose deployments are currently solely through colocation. In addition to existing operators, global data operators, financial investors, and domestic construction companies will flow in, which is expected to change the business structure centred on existing telecommunication companies such as KT, LG U+ and SK Broadband. The local market dominance of telcos has historically posed issues with carrier neutrality, but this may potentially be resolved by the entry of multinationals such as Equinix, Digital Realty, Digital Edge and Stack Infrastructure who have announced significantly sized projects that will go live from 2024 to 2025 onwards. However, local cloud services such as Naver, Kakao and NHN, and financial institutions are constructing self-builds for their own use, which will reduce their share of demand in the colocation market. Land near available power is increasingly scarce across the central Seoul CBD area, with multi-level builds required due to smaller parcel sizes and cost. Due to power shortages, KEPCO will not reserve power for future phases and operators will have to pay a minimum fee for the entire amount of contracted supply regardless of whether the data centre will be developed in phases or not. Land costs in Seongnam and Gangnam can be up to three times higher than land prices in Gyeonggi and Incheon, which is increasingly becoming locations of interest due to land/parcel availability and power supply. Locations north of the Han River such as Paju, are considered attractive due to more cost-effective land prices, land availability and power connections, however, international investors have shown an apprehension due to closer proximity the DMZ and have favoured the Incheon area to capture hyperscale demand.

ECOSYSTEM DEVELOPMENTS • Empyrion DC , the data centre arm of Singapore’s next gen infrastructure fund manager, Seraya Partners , has announced it is developing a 40MW green data centre in Gangnam. The project will utilise high-efficiency Building Integrated Photovoltaic Panels (BIPV) on the facade of the 10-storey project. Currently under construction, phase 1 is planned for ready-to-service status in 2024. • KT Cloud , a newly formed business unit of Korea’s telecoms firm KT Corp, has begun construction on a 26MW data centre, Gasan IDC, which will be a joint project involving DL Construction , KT and KT Cloud . The facility will have 10 stories above and 5 stories below ground and is scheduled to have phase 1 completed by 2025. • SK Group has taken full responsibility over a lithium-ion battery fire at their SK C&C Data Center in Bundang that caused massive disruptions to the operations of Kakao , a major Korean internet company that operates KakaoTalk, a messenger app service used by 90% of the nation’s population. The messenger app and other services including banking, payment and travel apps were disabled in the 11+ hour blackout. The incident has sparked disputes over monopoly regulations of online platforms and digital infrastructure in Korea and has raised criticism over Kakao’s dependence on SK C&C’s data centre. Kakao is building an independent data centre in Ansan, Gyeonggi that should prevent the recurrence of similar disruptions. • STACK Infrastructure , U.S.-based data centre developer, and ESR Cayman , a Hong Kong-based logistics real estate firm, have teamed up to jointly develop a 48MW data centre in Incheon with plans for completion aimed at Q4 2024. Power from KEPCO has been secured for the development. • STT announced plans for a second data centre in Seoul to be located in the Gasan-dong submarket. Partnering with Samsung SRA Asset Management and a global institutional investor, STT is planning for a 30MW capacity facility for delivery in 2025.