Digital Edge Kicks Off $1B Korea Data Centre as Gaw Jumps into Seoul Server Shed Market

Data centre startup Digital Edge has formed a KRW 1 trillion ($1 billion) joint venture to build a 120 megawatt server facility near Seoul which will rank as South Korea’s largest when completed, according to an announcement on Tuesday.

“Korea has one of the fastest growing data centre markets and this investment forms part of our ongoing commitment to this dynamic country, as we seek to bring the next generation of digital infrastructure to Asia,” said Samuel Lee, chief executive at Digital Edge, with the firm noting the data centre construction track record of its partner, SK Ecoplant, as instrumental to the greenfield development project in Incheon.

Singapore-headquartered Digital Edge announced this latest addition to its regional portfolio as Korea’s data centre ecosystem is predicted to grow by a compound annual growth rate of 7.72 percent from 2021 through 2026, according to independent research, as demand for cloud services from industry and consumers is expected to create a $5.25 billion market in the next four years.

Digital Edge released its news on the same day that Hong Kong’s Gaw Capital unveiled its first foray into the Korean data centre market through a new partnership with a local fund manager as foreign investors compete to supply the digital infrastructure needs of local and international cloud providers in Asia’s fourth-largest economy.

Aiming for 2024 Debut

Backed by New York’s Stonepeak Infrastructure, Digital Edge said construction work on its third Korean project will start later this year with the facility set to open in 2024. Its Korea country manager, Chulho Hyun, told Mingtiandi on Tuesday that the site will have two buildings with 60 megawatts of IT load each, with the project to be developed into two phases.

While the facility will be operated by Digital Edge under its corporate brand, Hyun said the two firms will jointly develop the campus.

The project is located in Bupyeong-gu, Incheon, near the Seoul-Incheon Expressway which gives it access to Seoul’s major business districts as well as Incheon International Airport. The new location will also serve as an extension to the firm’s existing facility in Yeoksam dubbed SEL1.

The Singaporean firm applied its own engineering design to the hyperscale project to minimise use of water and energy usage and ensure sustainability.

“We are delighted to partner with Digital Edge to build Seoul’s largest commercial data center,” Song Young-kyu, head of SK EcoSpace Business Unit. “Their global digital infrastructure expertise complements our strong construction experience, making this the ideal partnership as we further expand our data centre development business.”

Regional Expansion

The JV comes after Digital Edge entered the Korean market in April 2021 with its acquisition of a pair of data centres for $120 million from Korean network carrier Sejong Telecom.

“Digital Edge is actively pursuing a number of potential sites and opportunities for new build data centers across Asia as part of our ongoing expansion in the region,” Hyun said. “To support our mission to bridge the digital divide and bring international standard digital infrastructure to the region, we are continuing to listen to our customers to ensure we are where they need us to be.”

In December of last year Digital Edge entered the Philippine market with a project to develop a 10 megawatt facility near Manila, and during the same month the company agreed to spend $230 million to acquire five data centres in Japan.

Gaw Adds to APAC Platform

Underscoring the pace of investment in Asia’s data centre industry, Digital Edge’s announcement of its Incheon terabyte-barn came just hours before Gaw revealed a partnership with Korean private equity firm IMM Investment Corp to expand the Seoul-based firm’s Dreamline telecom division.

That tie includes Gaw investing in Dreamline’s Dreammark1 data centre unit which owns a 10 MW carrier neutral data centre in Seoul’s Guro district, as the Hong Kong firm expands its regional data centre platform into one more nation.

“We are delighted to have seized on this favourable investment in South Korea, which brings significant strategic value to our pan-Asia IDC platform,” said Kok Chye Ong, Gaw’s managing director and head of its IDC business in Asia excluding China. “Gaw Capital will continue to look for new investment opportunities and partnerships in South Korea.”

In addition to its Guro facility, Dreammark1 is also an investor in the Jukjeon Data Centre, a $160 million project near Korea’s Pangyo Techno Valley digital hub which is backed by CPPIB and local fund manager Pacific Asset Management.

Ong joined Gaw in July last year from Keppel Data Centres to expand the private equity firm’s data centre operation beyond its initial beachhead in China, with the company announcing a Southeast Asia joint venture less than two weeks later.

Earlier this month Gaw acquired a business park property in Western Tokyo that it will develop into a data centre campus with 40 MW of IT capacity. With backing from the Abu Dhabi Investment Authority (ADIA) the fund manager closed on $1.3 billion for its China data centre strategy in 2020.

South Korea ranked among the most advanced markets in Asia in terms of cloud computing readiness in 2020, according to the Asia Cloud Computing Association, as digital infrastructure companies in the country benefit from strong policy support from the government.