The market is among more than 100 wet markets under The Link, which also manages 180 malls at public estates. The renewal is a pilot project to test the feasibility of reviving traditional wet markets after the company spent two years researching examples in Taiwan and Japan.

Work started yesterday and is expected to finish by the middle of next year. The 54 existing tenants will have their stores expanded after they move into the new market. Another 30 new stores - including restaurants, a cooking school, floral shop and bakery - will be provided.

There will be a temporary market during construction.

Link chairman Nicholas Sallnow-Smith said the company looked forward to attracting more tenants after the renovation. He did not say if rents would be adjusted after three years.

Chief executive George Hongchoy Kwok-lung said wet markets had to keep up with changing trends.

Cissy Tsang Yuk-ying, head of market development, said four other markets would be renovated next year.

Tai Yuen Market tenants said business had declined since the 1990s. Although they will have to pay extra air-conditioning costs after the renewal, an improved shopping environment was vital to attract customers, they said.

Chu Chun-por, who has operated a restaurant since the market was opened three decades ago, said he would expand from 24 square metres to 36 square metres. He will pay about HK$350,000 to renovate his own premises and expected to hire more staff.

'Without air conditioning, the temperature can get as high as 40 or 50 degrees Celsius near the stove,' he said.

Tofu stall owner Cheung Ching-loi, 53, said business had dropped 60 per cent since the mid-90s as supermarkets and department stores drew customers away.

While he will pay the same rent until 2013, Cheung feared an increase later: 'Will rent double or triple?'

After The Link renovated the Lok Fu Shopping Centre in 2008, one tailor said the monthly rent increased from HK$4,000 to over HK$6,000.