Guangzhou R&F Properties acquired two commercial sites at Guangzhou's new business district, Pearl River New Town, the local government confirmed yesterday. The sites fetched 448.66 million yuan which analysts said was below prevailing market prices. The sites were bought in a Guangzhou government sale of six plots - the first such land disposal since nationwide austerity measures, including tightened lending for property developments, were introduced in May to cool an overheating market. R&F, the sole bidder, paid 148.66 million yuan or 2,380 yuan per square metre for lot A3-1, according to the Guangzhou Municipal Administration of Land, Resources and Real Estate. The company's 300 million yuan or 3,172 yuan per sqm offer for an adjacent site outbid another contender. Before the austerity measures took effect on June 1, a Pearl River New Town site sold at auction for 4,000 yuan per sq m, DBS analyst Oscar Choi said. A Macquarie Research report said that the credit tightening had substantially raised the barrier of entry into the property industry. 'We expect to see land prices fall as we believe more and more undercapitalised developers are going to exit the market,' the report said. Mr Choi said that the purchases were 'a good buy'. He said the developer could generate a gross profit margin of at least 30 per cent after development of a combined floor area of 157,017 sqm at a total cost of 880 million yuan including land cost, as prevailing transaction prices at the area were 8,000 yuan per sqm. Landy Luk, assistant to R&F's chairman, said no figure on the planned total investment for the two sites was available. A third 118,452 sqm commercial site at Pearl River New Town was sold to state-owned Yue Xie Enterprises for 480 million yuan or 4,052 yuan per sqm. Another commercial and godown site was sold to Guangzhou Cigarette Trading, the single bidder, for 51.27 million yuan. Two residential sites, to be announced next Wednesday, could fetch a total of about 1.8 billion yuan, sources said. Poly Real Estate Group has submitted the highest bid of 148 million yuan for the 38,450 sqm residential site in Haizhu district, while a 433,970 sqm residential site at Jinshazhou, Baiyun district, received the highest bid of 1.75 billion yuan from China Vanke's joint venture, sources said. Shares of R&F Properties rose 0.12 per cent yesterday to close at HK$39.15.