TAIPEI: The Taiwan component of American International Group's (AIG's) insurance unit, Nan Shan, has laid out NT$8.2 billion ($250 million) to buy a Taipei office building, the latest signal that optimism is returning to the property market. Fueling the optimism is an anticipated major influx of mainland investors into Taiwan's property market.

Taiwan's property market, fell sharply with the onset of the global downturn. Since the first quarter of 2009, however, investors have been returning, after the Taiwan government cleared the way for mainland investors to buy into Taiwan real-estate.

The decision was one of several policies introduced by the Ma Ying-jeou administration in efforts to try to resuscitate a battered economy, whose gross domestic product shrank at an annual rate of 10.2 percent in the first quarter of this year.

The latest purchase by Nan Shan brings the company's real estate investments to NT$30 billion this year, according to a company statement.

"The investment demonstrates the long-term commitment to the Taiwan market by Nan Shan," the statement added. Nan Shan is 95 percent owned by AIG.

Fubon Financial, one of AIG's major competitors in Taiwan, announced last month it had purchased a high-end department store from Shin Kong Financial for NT$11.6 billion.

In the midst of restored optimism, construction shares have charged ahead of the 20 percent gain in the broader market. Since brushing a low point late last month, construction shares have surged 70 percent.

Reuters

(HK Edition 05/27/2009 page2)