Macquarie Group, an Australian multinational investment bank and asset management company, is preparing to construct a data center in South Korea. As the data center industry has grown, various types of companies such as investment consulting companies and real estate leasing companies in addition to ICT (Information Communication Technology) companies are entering the market. As non-ICT companies are entering the market, intense competitions within the market are expected.
According to the industry, Macquarie Capital, which is an investment bank subsidiary of Macquarie Group, has started looking for a land to construct its data center. It has chosen Seoul and Gyeonggi as its two possible candidates and it will select a final candidate sometime during the first half.
In addition to South Korea, Macquarie Capital is also looking to construct data centers in Asia and major European companies such as Japan, Hong Kong, and France at the same time. If it is able to quickly wrap up a contract to purchase a land, there is a high chance that its first data center will be in South Korea.
“Macquarie Capital’s headquarters has been looking for an appropriate land behind the scenes since last year.” said a representative for the industry. “Once it signs a contract, it will select an ICT partner and work on constructing its data center.”
Other non-ICT companies have also been very active within the data center market.
Companies such as telecommunications companies and IT service providers that are related to ICT had led the data center market in the past. However, investment and asset management companies, construction companies, and real estate developers have constructed their own data centers or are working to enter the market since last year. It is heard that Macquarie Group’s Macquarie Asset Management is also looking to invest in data center in South Korea. “As the real estate rental industry is beginning to lose profit ratio due to increased vacancy rate, it is looking to invest in data center rental business.” said a representative for the industry. “South Korean major asset management companies are also making advance preparations to enter the market.”
As new types of businesses are entering the market, competitions are also expected to be very intense.
According to a market research company called Technavio, it is estimated the global data center market will be worth $437 billion by 2023 after growing at an annual average rate of 19% since 2018. According to Korea Data Center Council, it is predicted that South Korea’s commercial data center market will grow at an annual average rate of 15.9% until 2025 and it will be the second greatest data center market in Asia followed by Japan. South Korea’s data center rental market will also grow at the same time as multinational cloud computing service providers such as AWS and Google are constructing their data centers in South Korea.
As multinational data center rental businesses that are ranked first and second established South Korean branches in 2018, they have chosen South Korea as the key country within the Asian and the Pacific markets. South Korea’s data center market is also gaining momentum from recent extension or construction of large data centers by major telecommunications companies and IT service providers. Besides Macquarie Capital, it is heard that other foreign non-IT companies such as a Singaporean major company are also entering South Korea’s data center market one after the other.
“Constructing commercial data centers for outsourcing purpose is a global trend.” said Chairman Kang Joong-hyeop of Korea Data Center Council. “As South Korea has a geographical advantage of being close to China and South-East Asia and low electricity bill, there will be more cases of multinational companies constructing data centers in South Korea.” Chairman Kang also added that the market will continue to expand as non-IT companies are also participating in the market and that there needs to be a political support so that there will be fair competitions with multinational companies.
Staff Reporter Kim, Jiseon | river@etnews.com