[Herald Interview] Korea an ideal landing spot for megasized data centers

John Pritchard, the head of the tenant advisory group and global services at Cushman & Wakefield Korea, calls Korea a competitive investment destination for hyperscale data centers -- enormous tech complexes with soaring demand for data processing and storage in the burgeoning era of artificial intelligence.

“The Korean market is primed for hyperscale data center investment,” the executive at the Korean unit of the US commercial real estate services firm told The Korea Herald in a recent interview, citing the nation’s high internet penetration rate exceeding 90 percent, widespread utilization of smartphones and a well-established infrastructure.

“Also, the government has not created a moratorium like Singapore. I think certain markets that are closing create opportunity in Korea,” he added.

In 2019, the Singaporean government decided to implement a temporary halt in the expansion of data center facilities due to the substantial number of existing data centers in the country.

At that time, Singapore had over 60 data centers, collectively consuming 357 megawatts of power. This energy consumption accounted for more than seven percent of the country's total electricity usage. The restriction was lifted last year.

Pritchard also foresees that an increasing number of global firms that use AI-based technologies and services like OpenAI's chatbot ChatGPT, will contribute to increasing the demand for data centers in the country in the near future as well.

“Demand on data centers to power this new technology is going up," he said.

“Korean companies will start to have their own AI platforms as well. And self-build is preferable but it's not always easy."

Last year, the significance of data centers also became increasingly evident for many industry insiders here when two major Korean tech giants, Kakao and Naver, experienced service disruptions as a result of a fire at a data center located in Pangyo, just south of Seoul.

This incident served as a stark reminder of the critical role data centers play, and the impact their malfunction can have on businesses and individuals in Korea.

“As a rule of thumb, it is advisable for companies to have a disaster recovery solution in place in an active-active mode, or as you may call it, ‘Always On’," Pritchard said.

Despite the upbeat outlook, he admitted that there are also some hurdles that may hinder potential investment in Korea’s data center market.

“One of the major hurdles for global investors face when entering the Korean market is finding suitable sites within central and greater Seoul that have sufficient power capacity and correct and fiber connectivity,” he said.

“I'll give you an example of speaking to an operating investor yesterday. Across the globe, they have a mapping tool. They can map where all the fiber connection goes and the power is. Korea is the only country they couldn't get it.”

Pritchard said the client said such information is impossible to come about in Korea because the government restricts it for security reasons. He added that this also has to do with South Korea's unique geopolitical situation with the North.

In addition, he talked about some of the civil complaints that data center investors have to consider when investing in Korea.

The interview took place ahead of the publication of Cushman & Wakefield’s new report on data center investment in July. The upcoming report, first of its kind published by the company, covers key markets such as Seoul, Hong Kong, Singapore, Sydney, Tokyo and Mumbai as well as emerging markets such as Johor, Jakarta, Hyderabad, Bangkok, Manila and Ho Chi Minh City.