Gome chain has already shut three outlets in Central, Mong Kok, and Tseung Kwan O.

The chain's stores in Hong Kong are wholly owned by embattled retail tycoon Wong Kwong-yu, who is being detained by mainland authorities for alleged economic crimes.

Earlier this month, Hong Kong's High Court ordered the freezing of HK$1.66 billion worth of assets owned by Wong and his wife Du Juan at the request of the Securities and Futures Commission.

When Gome vacated its main shop in Mong Kok, its former landlord Francis Choi Chi-ming immediately put the premises back on the market for HK$2.5 million a month, 32 per cent higher than the rent the appliance retailer had been paying until it terminated the lease two months earlier than its expiry next month. Gome renewed the lease three years ago.

The big jump in the rental rate was part of an ongoing trend in the sector, property agents said.

'As a result, some underperforming retailers will be squeezed out of the market because rents show no sign of falling,' said one agent.

In core shopping destinations, it was mainly retailers of luxury branded goods targeting mainland buyers that could afford to pay higher rents, the agent said.

There was a similar jump in rents recently, when a mobile telecommunications company vacated its 450 sqft shop at Cameron Road in Tsim Sha Tsui, an agent said.

The company had been paying a rent of HK$130,000 a month, property agency Midland IC&I said.

When the firm did not renew the lease, the premises were let to a jewellery chain store for HK$180,000 a month, a rental increase of 38 per cent.

In Causeway Bay, one of the city's most popular shopping districts, two shops with a total floor area of 700 sq ft at 59 Russell Street were leased by a chopstick chain store and a watch retailer for a total of HK$684,000 a month two years ago.

But the two retailers fell victim to declining sales and were forced to move out when a local jewellery chain store offered to lease the shops for more than HK$800,000 a month, 17 per cent higher than the rent the two were paying.

The trend also saw department store Yue Hwa Chinese Products Emporium close its shop at Des Voeux Road in Central.

The shop has since been let to a cosmetics and fashion store at an 8 per cent higher rent than the previous lease.

Yu Choy-chun, an executive director of Yue Hwa, said the company was now looking for outlets of 7,000 to 8,000 sq ft in North Point and Yuen Long, depending on how 'reasonable' the rent was.

Kenneth Yau Ka-shing, a sales director of the retail department at Centaline Property, said that at the beginning of the year, with no expansion plans under way in the sector, very few new leasing deals were completed and tenants could bargain for cuts in their rent of 10 or 15 per cent.

But since April, as the stock market improved, confidence in the outlook for consumer spending had been restored, and tenants who had to renew leases for shops in Causeway Bay, Tsim Sha Tsui and Mong Kok faced a 10 to 15 per cent increase in rents recently.

Tony Lo, a director of the retail department at Midland IC&I, said retail rents in Causeway Bay had rebounded to levels last seen before the outbreak of the global financial crisis, as the district was attractive to local and mainland shoppers.

Rents had dropped 10 to 15 per cent, he said.

But the earlier downturn in spending had taken a toll on international brands that had expanded aggressively in the last few years, said Centaline's Mr Yau.

'Local brands who target mainland shoppers are the only retailers active in the retail market,' he said.

Luk Fook Jewellery leased a 1,500 sq ft shop in Tsim Sha Tsui in recent months and Vincent Tse Moon-chuen, a director at Luk Fook Holdings International, said turnover had rebounded to 80 per cent of levels before the financial crisis.

Chow Tai Fook Jewellery, a major jewellery firm in Hong Kong, will open new shops at New World Development's shopping centre K11 and also at iSquare in Tsim Sha Tsui.

'We had this expansion plan in mind before the outbreak of the financial crisis and did not give it up even after the crisis hit,' said Koo Tong-fat, a director at Chow Tai Fook Jewellery.

The jewellery shop's sales revenue had climbed to 90 per cent of the level before the crisis and the number of shoppers had increased 10 per cent from a year ago.

'Retailers targeting mainland travellers will not cut the number of shops in prime shopping destinations because they fear they would then lose market share,' Mr Yau said.

Epicentres

Rents in Causeway Bay, Tsim Sha Tsui and Mong Kok mainly affected

Since April, rates for renewed shop leases in three districts had risen up to: 15%

Number of Gome outlets in Hong Kong that have closed since last month: 3

Priced out

Gome Group has closed its 8,000 sq ft flagship outlet in Mong Kok

Recent reint increases in popular retail areas

Mong Kok Wang On Building: + 32%

Tsim Sha Tsui A2 7-7A Cameron Rd: + 38%

Tsim Sha Tsui A 66-70 Nathan Rd: + 3%

Causeway Bay G1, 2 59 Russell St: + 17%

Central G/F-1/F 55 DesVoeux Rd: 8%

Source: Midland IC&I