APAC Data Centre H2 2023 Update

ASIA PACIFIC ESTABLISHED MARKET

INCHEON/ W.GYEONGGI

SW SEOUL

GANGAM

KEY INDICATORS*

21 OPERATORS, 43 DATA CENTRES 608MW UC / PLANNED

453MW IN OPERATION 9% COLO VACANCY

STH GYEONGGI

* 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 Greater Seoul takes up 77% of Korea’s data centre market, a market share decrease from 85% since our H1 2023 update. This is attributed to the government’s aims to promote and incentivise data centre investment into other regions of Korea to balance the country’s power usage profile, with data centres operating in Gangwon, Pohang and Sejong. Despite this, 100MW of operational supply was added to Seoul in H2 2023, with Samsung SDS, Hanwha S&C, Daou Technology and IGIS Asset Management entering the market. The surge of new supply has increased the vacancy rate from 4% to 9% in H2 2023, which will likely be further impacted with an additional 97MW of supply pipeline planned in Gyeonggi from IGIS Asset Management and Daou Technology. Sourcing sites with sufficient power for data centres remains a challenge in Greater Seoul. To address data centre invoked power concerns, an audit was conducted by KEPCO in mid-2023 to assess data centre power applications submitted from 2020 to 2023. The results uncovered opportunistic strategies by investor groups, including several power applications by single entities across numerous sites, and even multiple power applications for single sites. As such, KEPCO has responded through tightening regulations to require power impact assessments and by granting additional powers to revoke power contracts in the event documents have not been signed, or power usage has not commenced within the statutory timeframes. To allay the concerns of residents around data centre developments, ease pressure on the grid, and plan ahead for network improvements, the government is promoting the concept of “data centre districts” outside of Greater Seoul, equipped with the requisite power, zoning and infrastructure. Governments in provincial locations are broadly supportive of data centre development where land is more readily available and power concerns are fewer. Owing to the large population, customer base, and strong latency profile, Greater Seoul remains the target for hyperscale and colocation groups. However, with the challenges that prevail more attention is being afforded to secondary and tertiary cities. Locations such as Busan, Korea’s second largest city, may benefit due to the strong cable connectivity, developed infrastructure, and strong labour pool.

SEONGNAM

ECOSYSTEM DEVELOPMENTS • Digital Edge secured its first-ever green loan of US$335 to finance the initial phase of development of South Korea’s largest commercial colocation facility, SEL2, a 100MW data centre located in Incheon. The first phase if expected to be ready for service in late 2024. • Digital Realty revealed the availability of a new AWS Direct Connect on-ramp at its ICN10 data centre in Seoul, which will enable customers to access AWS services either through a single cross connect or via ServiceFabric , Digital Realty's global service orchestration platform. • Equinix announced the launch of SL4, a retail International Business Exchange (IBX) retail colo facility, housed inside SL2x, the company’s upcoming xScale hyperscale data centre located in Goyang-si, Gyeonggi. • South Korean tech giant, Kakao , has completed construction of its first in-house data centre located on the Hanyang University’s Erica campus in Ansan, Gyeonggi. The facility has been designed to withstand natural disasters such as fires, earthquakes, and floods. Kakao experienced a significant outage in 2022 due to a fire caused by lithium-ion batteries at an SK Group data centre. The outage led to a government investigation and police raids and the company was required to implement an emergency response system and compensate businesses and users that were impacted by the fire. • LG U+ has completed construction of its second hyperscale data centre, Pyeoungchon 2 Center, in Anyang si, Gyeonggi. Spanning over 12 floors, three of which are underground, the will house more than 200,000 servers and a geothermal heating and cooling system.