[Edaily Marketin KIM SUNG-SOO Reporter] The rapid growth of the artificial intelligence (AI) industry is reshaping the investment landscape of South Korea’s real estate finance market. As the spread of AI services has led to a surge in demand for data centers with massive computing power, data center development projects are emerging as large-scale ventures worth trillions of won.

Financial institutions view data centers not merely as commercial real estate but as investment vehicles targeting core infrastructure for the AI era. The high likelihood of securing stable, long-term rental demand, coupled with high barriers to entry—such as securing power and land, as well as obtaining permits—which make it difficult for supply to keep up with demand, are cited as key investment attractions. Furthermore, the sheer scale of these development projects creates significant opportunities for financial institutions to provide funding through loans and investments.

According to the financial investment industry on the 20th, an AI data center currently under construction in Deokseong-ri, Yongin, successfully secured approximately 710 billion won in project financing (PF) last April. It is a large-scale project with a total project cost of 1.4 trillion won.

The Samjeong AI Hub Center in Bucheon, Gyeonggi Province, also completed a 159 billion won project finance (PF) loan on May 15, and a data center development project in Geumcheon-gu, Seoul, has also finalized its PF financing. This stands in contrast to the many other commercial real estate projects where the transition to a main PF has been blocked due to the burden of interest rates and construction costs.

Institutional investors—including securities firms acting as project finance arrangers, as well as banks, insurance companies, savings banks, and pension funds—are actively considering investments in data center-related project finance.

Compared to existing commercial real estate such as offices, PF interest rates for data centers are not particularly high. For hyperscale (mega-scale) data centers, while rates vary depending on leasing conditions, senior PF loan rates are in the early 5% to early 6% range per annum, while junior and subordinated rates are around 7% to 8% per annum. Nevertheless, financial institutions are showing interest in data centers not so much because of the interest rates themselves, but because of high expectations regarding future asset value and cash flow.

The nature of the leasing demand is also attractive to financial institutions. Unlike conventional offices, which rely on a large number of corporate and individual tenants, data centers often enter into long-term leases with a small number of high-quality tenants, such as major IT companies or cloud service providers. Since the leasing demand is stable, cash flow forecasting is also easier.

The fact that these are large-scale projects and fall under the category of “productive finance”—which receives government policy funding—also presents an opportunity for financial institutions. The pure construction and infrastructure costs for a 200 MW hyperscale data center—including the site, building, electricity, and cooling systems—are estimated to reach approximately 2 trillion to 3 trillion won. Therefore, data center development directly translates into a need for large-scale project financing (PF) and capital raising. As the number of large-scale data centers (50 MW or more) increases in Korea, financial institutions will inevitably see more opportunities to participate in project financing.

An official from the financial investment industry stated, “The core of the data center market lies not simply in constructing buildings,” adding, “As the spread of AI creates a massive need for large-scale facilities and power infrastructure, data centers are establishing themselves as a new major investment destination in real estate finance.”