As demand for data centers surges, "edge data centers" are emerging as a new alternative investment in Seoul's downtown real estate market. As large data centers struggle to enter Seoul due to site shortages and power procurement issues, asset managers and developers are turning to small data centers that repurpose existing downtown buildings.
According to the real estate and IT infrastructure sectors on the 10th, a consortium of Daishin Asset Management and Hanwha Solutions recently acquired the Hana Insurance Building in Inui-dong, Jongno-gu, Seoul, and is pushing to convert the building into an edge data center. After about a year of permitting, the consortium plans to raise the building's value through horizontal extension remodeling. A plan under serious review would convert the lower floors into a data center and keep the upper floors as offices. Once completed, it is expected to become the first downtown-type edge data center in Seoul's central business district (CBD).
Mastern Investment Management, a real estate-focused manager, is also pushing to build a 10 MW-class downtown edge data center in Yeongdeungpo-gu, Seoul. It is cited as the first case of an asset manager directly developing an edge data center within Seoul. Edgecore PFV is the project developer, and Hanwha's construction division joined as the builder. The facility will have a site area of about 1,385㎡ and a total floor area of about 9,733㎡, with completion targeted for the second half of 2028. It is expected to target Yeouido financial firms as primary users.
Until now, private investment in domestic data centers has focused on large facilities with power receiving capacity of 50 MW or more. But large data centers require massive power and vast sites, so most have been located on the outskirts of the Seoul metropolitan area or in provincial regions. Their distance from central Seoul can cause data transmission latency, and residents have often pushed back over concerns about electromagnetic waves and noise. Securing grid access and navigating permits are also seen as major obstacles to advancing projects.
In contrast, edge data centers consume relatively less power and are smaller, making it easier to use idle urban land or parts of existing buildings. They face less permitting burden than large data centers and require less power, which is considered advantageous for power procurement. The development timeline, which typically takes more than three years for large data centers, can also be significantly shortened. For these reasons, they see high utility in fields that require rapid data processing, such as Augmented Reality (AR), over-the-top (OTT) video services, finance, and artificial intelligence (AI) services.
The government has also moved to expand the use of small data centers. The Ministry of Science and ICT and the National IT Industry Promotion Agency (NIPA) recently announced the "2026 small data center-based AI industry growth support project." The aim is to support the growth of regional AI industries and activate related ecosystems by using small data centers under 10 MW. The government plans to select a total of three projects and invest about 8.9 billion won.
Industry officials see the development of edge data centers that use downtown offices and idle asset as likely to become a new investment theme in the real estate market. Converting buildings with rising office vacancies or declining profitability in their current use into data centers can raise both rental revenue and asset value.
An industry official said, "Supply of large data centers near Seoul is already nearing its limit," adding, "Developing edge data centers that use downtown offices or idle asset is an attractive alternative investment for asset managers." The official also noted, "Development projects to convert logistics centers with low profitability or Knowledge Industry Complexes with high vacancy into edge data centers will become more active going forward."