Hong Kong has long attracted attention in the global property world due to the volatility of its Hong Kong’s property for sale prices. Now, however, it has shot into the spotlight for another reason – property derivatives.

On Tuesday ABN Amro bank and Sun Hung Kai Financial announced that they had traded a property swap based on Hong Kong's residential market, marking the first such transaction that ever been seen in Asia.

However, with the ink now dry on the Hong Kong deal, bankers are predicting that a similar deal could take place in Australia in the next three months, followed by another transaction in Singapore in the next six months, and transactions in Japan and Korea towards the end of the year.

That means that in a few months time an investor may potentially be able "buy" an office in Sydney, "sell" a retail store in London and "buy" a residential property in Hong Kong by placing just one phone call, bankers say.

If so, this will mark a striking turnabout for a sector which some bankers believe could soon be an exciting new frontier for financial innovation, not just in Hong Kong but around the world.

Until a couple of years ago, property derivatives only existed in theory. But in recent months the sector has started to grow rapidly: in the UK, which barely had a market two years ago, there have been more than 300 deals worth close to £5bn, according to figures from Investment Property Databank, the research firm. Meanwhile, a number of transactions have been completed in the US and continental Europe, and bankers expect this to grow.

The inaugural transaction in Asia, at less than HK$100m, is small by global standards. But it comes amid growing appetite among cash-rich investors for new ways to invest in some of the world's fastest growing property sectors – that can also be alternatives to property stocks or real estate investment trusts, for example.

"Property is one of the hottest games in town and the potential for growth of property derivatives in Hong Kong is huge," says Philip Ljubic, a director of property derivatives at ABN Amro, which completed Tuesday's transaction with Sun Hung Kai Financial.

In the Hong Kong transaction, traded as a one-year "price return swap," ABN Amro – the buyer of the derivative – gains exposure to the city's housing market by receiving the annual change in the HKU-HRPI, an index measuring the price of Hong Kong Island residential property. This index is one of the subsets of a series developed by the University of Hong Kong partly for this specific transaction.

Meanwhile, Sun Hung Kai Financial – the seller of the derivative – receives a previously agreed basis point spread over HIBOR, the local risk-free lending rate. People involved in the deal would not reveal this spread.

However, the All Hong Kong Residential Price Index, a weighted average of the three sub indices including the HKU-HRPI, is offered at 650 basis points over HIBOR or roughly 10.5 per cent.

Property derivatives are popular because they, in effect, allow investors to take a view or speculate on a particular property sector without actually having to own the bricks and mortar. "Another big advantage is time," says Mr Ljubic. "A physical transaction can take weeks while a property derivative, once liquidity is established, could take minutes."