SOUTH KOREA Trends and Developments Contributed by: Junghwan Lee, Dong Seok Woo, Jun Woo Cho and Jee In Kim, Lee & Ko
hotels, residential assets and logistics centres located in Korea and worldwide, including the USA, the UK, Spain, France, the Netherlands, Italy, the Czech Republic, Sweden and Japan.
Lee & Ko Hanjin Building 63 Namdaemun-ro Jung-gu Seoul 04532 Korea
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Diversification of Commercial Real Estate Portfolios: Data Centres, Living Sector and Use Conversions Diversification of commercial real estate investment and growing legal considerations South Korea’s commercial real estate market has recently been showing signs of diversification into new sectors such as data centres and energy infra - structure, alongside a recovery in demand for tra - ditional asset classes. In particular, the late-2024 amendment to the Real Estate Investment Company Act expressly added data centres – including server facilities and telecommunications centres – to the list of assets eligible for REIT investment, laying a clearer legal foundation for digital infrastructure investment. As investment portfolios expand across a broader range of asset classes, investors should undertake a careful and conservative review of the regulatory framework applicable to each asset class. Digital infrastructure investment: data centre Data centre investment has become an increasingly active focus for foreign institutional investors, wheth - er through joint ventures with Korean developers or acquisitions of core digital infrastructure assets. At the same time, power-related regulatory requirements
have become a key consideration in the project per - mitting process. • Implementation of the Grid Impact Assessment Regulation: Under the Special Act on the Promo - tion of Distributed Energy, which took effect in June 2024, any new or expanded project with contracted power usage of 10 MW or more is now subject to a grid impact assessment. • Key Elements of the Assessment: The assessment report must be filed at least three months prior to the application for project plan approval and build - ing approval. The scope of review extends beyond technical matters, such as power availability and supply quality, to policy considerations includ - ing energy efficiency and distributed-generation suitability, as well as non-technical factors such as local fiscal contribution, economic and employ - ment effects and overall community acceptance. It is also notable that following the 2025 transfer of supervisory authority from the Ministry of Trade, Industry and Energy to the Ministry of Climate, Energy and Environment, regulatory scrutiny of such assessment reports has become increasingly stringent. • Market Response and Practical Implications: Given the difficulty of securing large-scale power capaci -
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