South Korean data centers are emerging as a promising alternative investment opportunity amid expanding artificial intelligence demand and overall supply shortages, according to a report released on the 13th by commercial real estate services firm CBRE Korea. The 'Korea Data Center Investment' report reveals that as of last March, the cumulative number of first-stage technical review applications for power grid impact assessments in the Seoul metropolitan area reached 522 cases totaling 33,592MW, yet only 10 received final approval. This severe approval bottleneck creates scarcity premiums for metropolitan data center assets that have already secured power and land, as selective supply concentrated in power-accessible regions becomes unavoidable even as over 1,450MW of new capacity is expected by 2028.
Seoul Metropolitan Area Power Approval Bottleneck Limits Supply
The report documented that as of last March, 522 applications for first-stage technical review of power grid impact assessments in the Seoul metropolitan area totaled 33,592MW cumulatively, but only 10 cases received final approval. Over 1,450MW of data center capacity is expected to be supplied in the metropolitan area by 2028, though selective supply centered on regions where power can be secured remains unavoidable. "Data center assets in the metropolitan area that have already secured power and land benefit from scarcity premiums due to supply shortages," the report stated.
Data Center Rental Rates Surge 79% Since 2019
The Seoul metropolitan area data center vacancy rate stands below 5%. Rental rates for raised floor space where servers are housed averaged approximately 140,000 KRW per kW in 2019, but jumped to 250,000 KRW in 2025. "The base of leasing demand will expand further as potential AI transition demand from Chinese cloud service providers, neo-cloud providers, domestic financial institutions, public and sovereign AI initiatives, and large corporate groups flows in," the report projected.
AIDC Special Law Reinforces Metropolitan Power Asset Scarcity
The Artificial Intelligence Data Center Industry Promotion Special Act (AIDC Special Law) enacted last month lowers the threshold for new non-metropolitan development, which is expected to strengthen the scarcity of power assets secured in the metropolitan area. CBRE forecasts that exit routes will diversify around assets that have secured quality tenants, as the likelihood of global infrastructure capital entry increases.
Global Infrastructure Capital Entry Expected to Diversify Exit Routes
CBRE anticipates that investment exit routes will diversify centered on assets with quality tenants secured, given the heightened possibility of global infrastructure capital entry. Choi Su-hye, Managing Director at CBRE Korea, stated, "Since data centers are heavily influenced by equipment, operations, and technological changes, a precise investment strategy is needed that comprehensively reviews lease structures, re-lease possibilities, and costs for responding to technological obsolescence."
FAQ
What is the current power approval rate for Seoul metropolitan area data centers?
As of last March, only 10 out of 522 first-stage technical review applications for power grid impact assessments in the Seoul metropolitan area received final approval, representing less than 2% approval rate for a cumulative total of 33,592MW requested.
How much have data center rental rates increased in South Korea?
Rental rates for raised floor space in Seoul metropolitan area data centers rose from an average of approximately 140,000 KRW per kW in 2019 to 250,000 KRW in 2025, marking a 79% increase over six years, while vacancy rates remain below 5%.
