South Korea Data Center Construction Market Size

South Korea Data Center Construction Market Analysis

South Korean data center construction market is projected to register a CAGR of 15.83%. The rising number of smartphone users and growing internet penetration is driving dependence on the cloud, telecom, and E-commerce, resulting in the need for more data center construction.

• South Korea has one of the fastest broadband connections globally. The country is also one of the fastest-growing, with respect to internet penetration. For instance, according to the Ministry of Science and Information and Communications Technology (ICT) (South Korea) and the National Information Society Agency of South Korea, the country had a total of 47.32 million internet users in 2021, an increase of 2.4% Y-o-Y in 2020. The number of Korean internet users has constantly been increasing over two decades without showing any signs of depreciation.
• The cloud service user penetration rate in the country is also expected to drive the absorption rate in the country. According to a survey by Korea Information Society Development Institute, the cloud service user penetration rate increased from 5% in 2012 to 18.7% in 2021.
• The move to a digital economy has created significant demand for internet-based infrastructure. Many South Korean start-ups and enterprises are deploying cloud infrastructure platforms, and the ecosystem supporting this infrastructure will continue to mature.
• The rise of South Korea's data center market has prompted data center providers to expand their operations in the country and improve the absorption rate among the facilities. Many global Real Estate Investmtne Trusts (REIT) companies are currently building or planning to build its own data centers in the country through joint ventures with local construction and engineering firms.
• Furthermore, the COVID-19 pandemic struck when demand for data center capacity was expanding rapidly, and it applied restrictions to constructing new facilities. There was a specific impact on the market, such as data network traffic increased the traffic by increasing usage of applications such as Zoom and Microsoft Office, among others. Moreover, the pandemic caused challenges in constructing a data center due to disruption in the supply chain, which slowed down the market's growth. However, post-pandemic, the demand for data capacity has more than tripled, and companies are shifting toward a hybrid cloud environment. Hence, the market has seen a resurgence in data center construction.