Will high operating costs derail Singapore's data centre dominance dreams?

 Malaysia is aggressively wooing developers, too.

Although Singapore has successfully established itself as Southeast Asia's leading data centre (DC) hub, CBRE analysts warn that high operating costs in the city-state will always remain a sticking point for DC operators and developers.

For instance, stiff competition has emerged from other countries in the region, such as Malaysia. With the backing of the Multimedia Development Corporation, Malaysia aims to grow DC space to five million square feet by 2020.

"This goal is being worked towards by actively promoting itself as a viable alternative to Singapore in the region and through the creation of Data Centre PArks such as Sedenak Industrial PArk in Iskandar and Cyberjaya near Kuala Lumpur," said CBRE.

Malaysia is a tough contender because it shares many similar attributes with Singapore, such as relative political stability and a natural disaster-free geography. Unlike Singapore, Malaysia also has much lower business costs and access to cheap abundant energy.

Other potential contenders include Indonesia and Thailand, which boast sizeable populations, relatively liberalised networks and reasonably functional infrastructure.

Despite these setbacks, Singapore retains an edge over its competitors.

"Singapore can count on the fact that it is in excellent shape to maneuver around these obstacles and capitalise on the demand that is only going to keep rising with the growth of cloud computing. Given the relative infancy of the DC sector in SEA, Singapore can capitalist on this niche