Navigating data centre opportunities across APAC - South Korea

South Korea is a burgeoning hub for data centre investment. With its robust economy and reputation as a regional ‘safe haven’, South Korea attracts strong interest from international investors, developers and operators.

To explore settings in other jurisdictions visit our APAC Regulatory Guide.

Sources: Worldometer, Statista, Business Wire, Cushman & Wakefield

It presents a compelling landscape for data centre investment, particularly due to the absence of foreign investment restrictions and presence of attractive incentives.

However, potential investors must navigate challenges. Key among them are the significant electricity supply constraints and regulatory complexities. While the promise of an open and thriving economy is enticing, understanding the regulatory nuances and addressing infrastructure limitations are crucial for successful investment in South Korea.

Open to foreign investment

While the market is still somewhat inward looking, South Korea has a liberal approach to foreign investment and ownership offering an advantage for international investors.

There are few restrictions on land acquisition, except in designated military zones, and no specific limitations on data centre ownership — aside from a cap on foreign shares in facility-based telecommunications services.

Power constraints

South Korea's power supply constraints pose a significant challenge for data centre investment and development.

Korea Electric Power Corporation (KEPCO) is the sole electricity provider, and it faces limitations in transformers and transmission infrastructure, particularly in high-demand areas. This bottleneck means a power procurement timeline of several years, and can lead to further delays in securing adequate power supply, complicating project timelines and operational planning. Regulatory requirements for power system impact assessments and energy use plans also add layers of complexity.

Incentives in designated areas, for investment entities and foreign entities

Special Opportunity Development Zones and Leading Investment Districts provide reductions or exemptions from corporate income tax and acquisition tax for data centres developed in those areas.

These zones are designed to attract foreign investment and foster innovation, creating an environment conducive to growth. Acquisition, corporate income and property taxes may also be reduced or waived if certain investment vehicles are used to invest in data centre operations. Foreign investments of over US$2 million to develop or operate data centres involving new growth technologies may also see similar incentives.