S. Korean builders double down on AI DCs

SEOUL: South Korean builders are racing into data centres (DCs), chasing multibillion-dollar opportunities as the generative artificial intelligence (AI) boom fuels a global surge in demand for computing infrastructure.

Global real estate consultancy JLL estimates that the DC market will grow at an annual average rate of 14% through 2030, while global DC power consumption is expected to nearly double from around 103 gigawatts (GW) in 2025 to 200GW by 2030, led by an infrastructure super-cycle requiring up to US$3 trillion in total spending.

According to JLL, the average construction cost of DCs rose 38% over five years, from US$7.7mil per megawatt (MW) in 2020 to US$10.7mil in 2025. The figure is expected to climb further to US$11.3mil per MW this year, underscoring the rising value of DC construction projects.

Hyundai Engineering & Construction (E&C) has the largest DC construction track record among South Korean builders, having completed four DC projects in the country. The company is participating in an AI DC project in Saemangeum, North Jeolla Province, and began construction on the 40MW Ansan Sihwa AI DC in June.

Daewoo E&C is emerging as a major contender, establishing a dedicated DC- dedicated task force in April to strengthen its design, technology and construction capabilities and develop new projects.

The builder also signed a partnership with DC operator KINX in July to connect development, construction, and operations as part of its longer-term strategy to expand from construction into land acquisition, development, operations and eventual asset sales.

Daewoo E&C completed the 40MW Empyrion Digital AI Campus in Gangnam last year and is participating as both an investor and constructor in the up-to-60MW Pine DC in Jangseong, South Jeolla Province. The builder is also pursuing projects with capacities of 200MW to 300MW in the Jangseong and Gangjin areas of South Jeolla Province.

Samsung C&T is pursuing orders from global technology giants while looking beyond South-East Asia to the Middle East and Australia. It won a 40MW Ansan Global Cloud Centre project worth 400 billion won (US$283mil) in November 2024 and has also participated in DC projects ordered by Samsung affiliates.

For a 2.4MW DC project in Chuncheon, Gangwon Province, Samsung C&T said it would use modular construction methods designed to shorten construction time and facilitate future expansion.

GS E&C is taking on one of the largest projects in the domestic pipeline, working with the local governments of Gangwon Province and Donghae to develop an AI DC campus with a total planned capacity of 2.4GW. The first 1.2GW phase is estimated to require around 10 trillion won, with the groundbreaking targeted for early October.

Having constructed a 20MW AI DC in Seoul, DL E&C is developing an 80MW DC project in Gimpo, and DL Construction bagged a 126.8 billion won contract for a 9.8MW AI computing-focused facility in Bucheon in May.

SK Ecoplant, which is participating in the construction of the 103MW SK-Amazon Web Services DC in Ulsan, recently set up an AI DC-dedicated team to better handle the rising demand for AI infrastructure.

The economics of the business offer a lucrative source of revenue for builders.

Compared with housing developments, DCs typically have shorter construction periods, while offering project values ranging from hundreds of billions of won to several trillion won.

“Construction firms are paying close attention to DCs because they can generate sizeable orders within a relatively short construction period,” a construction industry official said.

“Once builders expand into land development, equity investment and operations, they can continue generating rental and operating income long after construction is completed.”

Policy is adding another layer of momentum as the South Korean government laid out plans to support the construction of 8.4GW of AI DCs by investing 550 trillion won through 2029 in cooperation with the private sector.

According to a recent report by the Korea Research Institute for Construction Policy, AI DCs are increasingly being treated as strategic infrastructure assets, rather than simple buildings.

Developers are seeking contractors capable of coordinating the entire project lifecycle from grid connections, substations and backup power systems, to cooling infrastructure, telecommunications networks and regulatory approvals.

“The capabilities of builders in the future DC market will depend on how effectively they can integrate shorter power procurement lead times, modular prefabrication, parallel construction processes and early commissioning,” said Lee Gyu-eun, an associate research fellow at the Korea Research Institute for Construction Policy.

“In the near term, construction companies are likely to focus on strengthening their position in the terrestrial AI DC market. Over the longer term, however, accumulating expertise in modular construction, robotics, remote operations and thermal management could lay the groundwork for entering the emerging space infrastructure market.” — The Korea Herald/ANN