[Edaily Marketin KIM SUNG-SOO Reporter] "Construction costs range from 10 billion to 15 billion won per 1 MW, meaning that building a 200 MW-class AI data center would require 2 trillion to 3 trillion won in construction costs alone. If IT hardware, such as high-performance graphics processing units (GPUs), is included, the total project cost could exceed 5 trillion won. Investment opportunities for institutional investors are bound to increase."

With the dawn of the artificial intelligence (AI) era, AI data centers (AIDCs) are gaining attention as a new “trillion-won-scale investment target” in the domestic real estate finance sector. This is because training and running AI models requires massive computing power and storage capacity, yet the data infrastructure to support this remains insufficient.

From the perspective of financial institutions, AIDC project financing (PF) is attracting increasing attention because it allows them to supply capital to the structurally growing AI industry while securing stable cash flows.

Senior PF Rates in the 5–6% Range… “Profitable Infrastructure” on the Rise

According to the financial investment industry on the 20th, domestic financial institutions are successively entering the AI data center PF market.

In the case of the 60-MW AI data center being developed by Korea Investment & Securities in Gunsan, North Jeolla Province, a bank loan was secured at a senior PF interest rate in the low 5% range. Since it is a high-quality asset fully leased by a major IT conglomerate, the company successfully secured lenders even at this relatively low rate of “low 5%.”

This project involves constructing a data center on the site of the Gunsan National Industrial Complex No. 2. The company aims to break ground on the 60MW facility within this year and is also pursuing plans to expand it to 300MW in the future.

The fact that Korea Investment & Securities is both directly investing in the data center development project and arranging the project financing (PF) demonstrates that financial institutions view data centers not merely as loan products but as a new area for infrastructure investment.

Senior project finance loan rates for AI data centers range from the low 5% to the low 6% per annum, while junior and subordinated loans are around 7–8% per annum—rates that are not particularly high compared to office real estate. For example, they are slightly lower than the 6.12% senior interest rate for Zones 3-8, 9, and 10 of the Seun Urban Renewal Promotion District in Jung-gu, Seoul, which is currently being developed as an office district.

Nevertheless, financial institutions are focusing on data centers due to stable rental income and expectations regarding asset value after completion.

The nature of rental demand for AI data centers differs from that of general office spaces. Since large cloud service providers and IT companies often use data centers for extended periods, securing pre-leases during the development phase makes it relatively easier to predict cash flow after completion.

In fact, for the AI-dedicated data center currently under development in Pohang, North Gyeongsang Province—with a total project cost of 600 billion won—NHN Cloud has agreed to a long-term lease for 20 MW of capacity. This establishes a pre-leasing structure that secures tenant demand from the early stages of development.

Higher Development Returns Than Offices… Attractive Demand for Large-Scale Project Financing

Another investment appeal of data centers lies in the profitability of the development project itself.

The real estate management industry estimates the expected rate of return for a 40-MW data center development project to be around 20% based on the internal rate of return (IRR). This calculation assumes a total investment cost of approximately 600 billion won and a terminal cap rate of 5.25% for the property’s sale value upon completion.

The terminal cap rate is the ratio of the sale price to the net operating income (NOI) expected when the asset is sold at the end of the real estate investment period. Compared to office development projects, which are said to have an expected return on investment in the mid-10% range (based on IRR) under the same conditions, data center development projects are considered relatively more profitable.

However, data centers do not guarantee high returns unconditionally. The key factors that financial institutions focus on are tenant demand driven by AI, limited supply, and the power supply and permits secured during the development phase.

Unlike conventional office buildings, data centers are not assets that can be operated simply by constructing the building. They require large-scale power grids, cooling systems, and telecommunications networks; the more specialized the facility is for AI, the more it requires infrastructure capable of handling high power consumption and heat generation.

Consequently, development costs for data centers are higher than those for general commercial real estate. With the project cost for a 200MW-class hyperscale data center estimated at over 5 trillion won, the role of financial institutions is expanding. Since it is difficult for developers to finance the trillions of won in development costs with their own capital alone, they require various sources of funding, including senior project finance (PF) loans, as well as mezzanine financing, subordinated loans, and equity investments. From the perspective of financial institutions, this means they can secure demand for project financing.

From “Buildings” to “Power and Operations Companies”… Investment Targets Are Expanding

What distinguishes data centers from traditional real estate project financing is that investment targets are not limited to buildings.

The competitiveness of AI data centers depends on comprehensively securing a stable power supply, cooling systems, and server operation capabilities. Consequently, the scope of investment may expand to include energy infrastructure such as power grids, power generation facilities, and battery energy storage systems (BESS).

The fact that the Pohang AI-dedicated data center was selected as a project under the government’s Regional Revitalization Investment Fund is also because data centers are now recognized as regional digital and power infrastructure, rather than merely real estate development projects. This fund operates on a structure where a master fund—financed by government funds and other sources—serves as seed capital for large-scale projects identified by local governments and the private sector.

Investment approaches following development are also changing. A data center is an asset that combines not only the building itself but also servers, power and cooling systems, and operational capabilities. Consequently, in the global market, in addition to directly purchasing data centers, investors are utilizing methods such as investing in stakes in operators or platforms.

In South Korea as well, the potential for expanded data center investment through REITs is growing. As the Ministry of Land, Infrastructure and Transport pushes for regulatory reforms to recognize equity stakes in companies that own and operate data centers as eligible investment assets for REITs, the potential for indirect investment through stakes in data center operators is also expected to expand.

Asset management firms are also stepping up their efforts. Koramco Asset Management, for instance, is planning to establish Korea’s first listed data center REIT, reflecting a growing trend toward utilizing data centers as a new real estate investment asset.

An official from the financial investment industry stated, “As the number of AI data centers increases in the future, the investment formula for real estate finance will also change,” adding, “A market is opening up where funds can flow not only into the buying and selling of completed buildings, such as offices and logistics centers, but also into data center development project financing (PF), stakes in operating companies, and power and energy infrastructure.”