Hong Kong claims world's most expensive office space.

The world has a new king of real estate. Gone were the days when New York, London and Tokyo dominate the list – it is now all about Hong Kong. Few weeks ago, we touched into how shop rental in Hong Kong’s Causeway Bay has become the second most expensive in the world (after New York’s Fifth Avenue), fetching US$45,000 a month for a small 250 sq ft shop space, zimbabwemetro.com reports.

Well, that was for shop, today a new report surfaced that Hong Kong has unseated London as the world’s most expensive place to take up office space, a result from the growing appetite of global businesses to increase their presence in Asia.

According to London-based Knight Frank’s 2012 review of global real estate markets, Hong Kong’s prime office space, which includes the city’s bustling Central district, was renting for as much as a monthly HK$1,046 (US$152) per square feet, a growth of 28%. The rise is the sharpest of all the established financial centres, comes as the financial services industry’s focus on Asia drives up occupancy rates across the continent’s main office markets.

By contrast, London’s spiffy West End, previously the most expensive place for office space, is now renting at £92.50 (US$144) per square feet. In the U.S., offices in New York’s Manhattan are off for rent at US$64.36 per square feet.

Also clawing its way up the real estate charts last year was Beijing. Prime office rents in the Chinese capital soared 46% in 2011, which allowed the city’s ranking on the list of the world’s most expensive places to rent to rise 29 places to reach the 19th. Double-digit prime rental growth is again forecast this year for both Shanghai and Beijing, says Matthew Colbourne, senior analyst with Knight Frank, noting average occupancy rates in both cities is now over 95%, putting more upward pressure on rental prices.

Hong Kong is now a “bellwether” in the global real estate market, says Mr. Colbourne. “It’s the one that always seems to react first to volatility in the financial markets,” he added, mostly because of its reliance on tenants in the global financial industry.

Likewise, in India, both Mumbai and New Delhi’s position jumped, with the two cities moving up to rank as the 14th and 20th most expensive cities to rent office space in, respectively. The global top 10 for office rental includes Hong Kong, London (West End), Tokyo, Moscow, Paris, Singapore, Perth, London (The City), Geneva and Sydney.

For so many decades, we have long been used to the Big Three of global real estate market – New York in commercial/retail, London in office, and Tokyo in residential. As far as you have read now, Hong Kong is surging ahead in shop and office, but how about residential?

Of course, there are reports too for that: The Wall Street Journal has just published that the rental for residential properties in Hong Kong has toppled Tokyo, with the Chinese city now boasts the most expensive in the world. Renting an unfurnished, three-bedroom apartment in Hong Kong’s prime neighborhoods will cost US$11,800 a month, according to new data from ECA International, a human resources consulting firm. How about the former champion, Tokyo? US$9,500 a month.

If you’re an expat and is freaking out on these prices, ECA International points to Karachi, Pakistan, as an alternative. There, the report notes, a three bedroom will cost you an average US$360 a month – the cheapest residential rental in Asia for prime locations.