INVESTORS from Southeast Asian countries and regions, which were considered a major force in driving Shanghai's housing prices higher, have shifted their focus to the city's commercial property from the residential sector, industry insiders said.

"Staring from the second quarter of this year, we have gradually received inquiries on commercial property from Asian investors, most of whom used to focus on the residential sector only," said Remy Chen, head of commercial sales for Jones Lang LaSalle, a real estate service firm.

Buffeted by austere measures imposed by the city government earlier this year, which aimed to cool the overheated housing market, the growth of Shanghai's high-end residential properties slowed while the commercial property sector maintained its rise.

The prices of Shanghai's luxury homes dropped by 4.5 percent in the third quarter for the first time this year, said a Colliers International latest report.

Meanwhile, the average grade A office rental in Shanghai rose by 7 percent to 92 US cents a square meter per day from the previous three months on growing demand and a limited supply, said the report. The rise also represented a 21.69 percent increase from a year ago.

As rentals in prime locations continue to climb, smaller companies are increasingly migrating outwards to secondary office nodes such as Hongqiao and Dapuqiao.

Shanghai Yueda Real Estate Co, developer of the Yueda International Tower in Caojiadu area, which is 20-minute-walk from Jing'an Temple, said the buying spree from Hong Kong, Singaporean and Malaysian investors has boosted its sales strongly in the past few months.

Analysts said the anticipation of further currency appreciation and the optimism over China's economic growth potential will attract increasing capital from Southeast Asia where most of the population has strong links with China's mainland.