HKUST is no longer Asia's top university, but it remains in the top five. For the first time in the QS World University rankings' five-year history, a Hong Kong university is not the top Asian institution for higher education.
After heading the rankings for the past three years, the University of Science and Technology has slumped to fifth. Top of the list is the National University of Singapore.
Elsewhere, the Korea Advanced Institute of Science and Technology leapt from sixth to second. HKU slipped one place to third, and the Chinese University of Hong Kong rose one place to sixth.
Maria Masud, 17, from St Margaret's Girls College, says a university's ranking is crucial in deciding which universities to apply for.
"If the rankings of local universities continue to drop, I'm afraid I will have to move out of Hong Kong for university," she said. However, Sonali Gidwani, 17, from West Island School, thinks there are more important things to consider than ranking.
"I have applied to HKU to study politics. Although it isn't ranked as the highest in Asia, I would still choose to go there over Singapore," she said.
"I think local employers are also more likely to choose a candidate - for certain jobs - that has graduated from HKU, as they are familiar with the calibre of the graduates from that university.
"When choosing universities, one shouldn't only look at rankings. You should try to learn about the kind of education you will be receiving," Sonali said. "It's important to research beyond rankings."
The team behind the rankings said strong research development in Singaporean and South Korean universities had contributed to their rise, while Hong Kong universities had reduced their teacher-to-student ratios.
Additional reporting by Wong Yat-hei