Low vacancy, strong fundamentals: Korea’s data center market ripe for investment, says Cushman & Wakefield

INTERVIEW

Data centers in Seoul have almost no spare resources left to rent to new tenants, even as demand for AI services climbs.  As a result, global investors and developers are now looking to expand outside the greater capital region, according to Andrew Green, head of Asia-Pacific data centers at global commercial real estate services firm Cushman & Wakefield.

Seoul's data center vacancy rate stood at just 1.1 percent in the first half of 2026.  By comparison, this was just as low as the vacancy rate in the data-hungry Virginia market — the world's largest data center market — during the same period. 

The data center vacancy rate is the percentage of unleased or unused resources within operating data centers of a given data center market.

A low vacancy rate indicates a tight market and rising costs, while a high rate means an oversupply of unused facility space. 

Seoul's vacancy rate is the second-lowest among major cities in the Asia-Pacific region; only Johor Bahru, Malaysia, was lower overall, at 0.7 percent. The Malaysian city borders Singapore and has long served as an overflow market for Singapore's own data center demand.

Despite Seoul's well-established digital infrastructure and AI-driven demand, the city's operating scale is notably small compared to global figures: 663 megawatts are operational in Seoul, compared to Tokyo's 1,397 megawatts and Singapore's 1,068 megawatts. 

Still, global developers and investors view Korea as an important data center market because of its combination of strong demand, low vacancy and high rents. That combination could translate into new revenue for investors building infrastructure, since hyperscalers, facing high costs, increasingly prefer to rent space rather than build their own facilities. 

“Korea's investment proposition is not purely a scale story,” Green said in a written interview with the Korea JoongAng Daily. “While markets such as Chinese Mainland, India, Australia and Malaysia benefit from significantly larger development pipelines and larger future revenue pools, Korea stands out for its combination of strong demand fundamentals, low vacancy, premium rental and limited supply.”

Cushman & Wakefield's maturity index — its rankings of how developed and investable data center markets are — places Seoul in the established tier alongside Singapore; Hong Kong; Shanghai; Kuala Lumpur, Malaysia; Jakarta, Indonesia; Bangkok; and Melbourne, Australia, meaning developers will increasingly look to rural areas for expansion to keep pace with rising demand for AI infrastructure. 

“The primary driver is access to power rather than proximity alone,” Green said.

Green emphasized that global developers are now prioritizing not just land but powered land. If that is unavailable, he said, there must be a tangible plan for timely energization.

“Many are willing to consider secondary locations if they can secure substantial power capacity and maintain acceptable network performance,” Green said. “This trend is expected to continue as power constraints intensify.”

Korea remains expensive to build in, with the third-highest cost per megawatt in Asia-Pacific, excluding Singapore and Japan, according to a Cushman & Wakefield report. But it remains an attractive destination for data center investment because of its high yield-on-cost, which Green estimated at between 9 and 10 percent.

“For many investors, Korea is viewed as a lower-risk market capable of generating consistent long-term returns rather than a market pursuing the largest scale of capacity expansion,” he said.

Outside of clustered Seoul, global developers and investors are now looking at Busan, Ulsan and Gangwon as suitable locations for building data centers.

The Lee Jae Myung administration plans to spend more than 1 quadrillion won ($743.9 billion) on AI data center expansion, targeting 18.4 gigawatts of capacity by 2035 and pushing infrastructure away from the greater capital region. SK, GS and Naver will lead the project.

Samsung Electronics and SK hynix have also pledged 800 trillion won to build chip clusters in the southwestern Honam region.

In securing land to host this unprecedented build-out of AI-related facilities, timely supplies of power and water are key factors, but Green said the former is more critical for data centers.

“Compared with power, water is generally a localized constraint rather than a nationwide bottleneck,” he said. “Power directly determines whether a project can proceed and when it can be delivered.”

Green said there is no universal substitute for grid power at hyperscale. Ultimately, successful projects are determined by those who secure sufficient utility power and related infrastructure early in the development phase.

Globally, the data center market is experiencing steep growth, with global operational capacity projected to more than double by 2030. In the first half of 2026, Asia-Pacific's development pipeline rose to a record 26,455 megawatts, with 4,764 megawatts under construction and 21,691 megawatts in the planning phase.

Green noted that investors are treating data centers as infrastructure assets rather than traditional real estate. Lenders now typically require at least 65 percent of a facility's capacity to be contracted before committing funds, Green said, with grid allocation secured and utility agreements largely finalized.

“Sites with secured power generally command significantly higher valuations than sites with land alone but uncertain power access.”

BY LEE JAE-LIM [[email protected]]