Hong Kong is the most expensive rental market in the world due to high demand and inadequate supply of rental space, a report published by Forbes, Feb. 12, based on data from Mercer Human Resource Consulting, has revealed.

Slowdown in the US economy leading to dollar's plunge has made foreign markets like Hong Kong, Moscow and Tokyo pricey.

In Hong Kong...in dollar-adjusted terms, a two-bedroom, unfurnished apartment runs $6,398 a month. By comparison, $4,000 a month for Moscow and $4,102 for Tokyo look cheap, says author Matt Woolsey.

Forbes' findings are based on data taken from Mercer Human Resource Consulting, which based its numbers on 2007 data for rental properties in the 'Class-A market.'

Though it means different things in different places, a Class-A designation roughly equates to a unit in high-end, unfurnished building in a good part of town. The measures are taken at the median level, so as to exclude the ridiculous costs of premium apartments in neighborhoods like London's Belgravia or on Central Park in New York, Woolsey says.

Rents were adjusted from local currencies to dollars, the author said, even as the dollar struck record low against the euro and the British pound in 2007.

According to Woolsey, American companies with offices in other countries are likely to be hard hit as even subtle increase in local rental rates combined with depreciation in dollar may result in huge jumps in overall prices.

For instance, adjusted against the dollar, London witnessed a 30 percent jump in rent from 2006 to 2007. However, this is nothing, considering the 33 percent jump in Moscow, Russia and a whopping 87 percent jump in Bangalore, India.

And, given that Americans can't seem to afford 3-6 percent increases in mortgage payments, says Woolsey, the jump is steep indeed.

Large, multinational companies feel the pinch less than small businesses, for whom anywhere from a few hundred to a thousand a month is a lot to fret over, the author notes, adding that since 2006, monthly rents in Hong Kong, as measured by Mercer, grew from $4,898 to $6,398, while in Moscow, they rose $1,000, and in London they jumped about $900.

According to Forbes report, Hong Kong tops the list, with prices on the Peak and in the central Hong Kong, home to much of the city's financial centers, averaging $6398 a month.

Grabbing the second spot is Tokyo with rents at $4102 a month. In spite of a soft yen, prices in Tokyo are extremely high and rental properties, especially apartments, are much smaller than in the US.

At No.3 is Moscow ($4000 a month), mainly due to the economic boom driven most notably by oil.

Close behind at No.4 is New York City ($4000 a month) specially Manhattan where it is not unusual for renters to spend more than half their take-home pay on housing.

Rounding up the top five is London at $3889 a month up from $2977 last year. The dollar is at a 25-year low against the pound, which is now worth about $1.95. Home prices in London vary greatly depending on location, with places in Belgravia and Knightsbridge the most expensive, says Forbes.

While Seoul ($3425 a month) grabs the sixth spot, at No.7 is Geneva ($2840 a month) where prices have appreciated 17 percent from last year. As one of the most viable tax shelters in Europe, and home to many multinational banking institutions, Geneva sees a huge demand for rental properties, especially among the business set, Forbes says.

Beijing ($2840 a month) at No.8 is an expensive place to live in, despite China's very low per-capita wealth.

Paris, at No. 9 ($2634 a month) is the second-most expensive rental market on the Continent, behind Geneva, says Forbes.

Lastly, at No.10 is Osaka ($2564 a month). With one of the largest population densities in the world, Japan houses an extremely dense stock of rental apartments in its centers of commerce, says Forbes.

Still, there's not enough supply to meet demand in prime locations, the report says.