SAVOUR the dregs of your next cheap beer in Lan Kwai Fong. It could be your last. Some time in the New Year, a champagne bar will grace the hole left by Scotties, a slightly more boisterous purveyor of less exquisite waters. And for many it will mark a transition, spurred by the tragic events of last New Year's Eve. Now, one year later, rents and prices are up, business is apparently booming after a rocky start and more and more restaurants are opening up attracting a more refined crowd. The tragedy appears to have driven away the lower end of the market, but the street's entrepreneurs have been quick to capitalise on the street's glitz to pounce on any vacant spot. ''No one's going ever to forget what happened last New Year, but the street now is really jumping and business is good if not better than ever,'' said restaurant owner and former Lan Kwai Fong Association chairman Barry Kalb. ''In a strange way the tragedy has forced along a trend among entrepreneurs we had been trying to foster anyway, based around a greater range of higher quality entertainment,'' he said. Now there are 38 restaurants, clubs and bars on Lan Kwai Fong, this year having seen five new spots open, mainly high-class restaurants, and another three older joints converted. Two, more raucous, establishments shut. Association chairman Richard Feldman, for four years general manager of Grafitti, said the demand for restaurant space had become so great that not one ground floor shop remained. ''Things were very slow for the first three months but now things are away,'' Mr Feldman said. ''Some places closed and some patrons did not return and we're not seeing the ugly side of drinking any more. Creating a more relaxed, civilised environment, where you can actually have a drink and talk to someone, had been our intention. ''After New Year we basically said we need to do that and we need to do it now and Lan Kwai Fong is responding. Our traditional market has grown up.'' Mr Feldman said the association estimated turnover had increased by about 16 per cent since the same time last year. An average-sized Lan Kwai Fong venue needs between $800,000 and $2 million gross turnover each month to survive, and many are bettering that. Supatra's, an established Thai restaurant, recently faced a 35 per cent rent rise. Last night staff at bars throughout the district said they had definitely noticed a change from last year. ''We're getting people now with a lot of money, and they are spending it,'' said Zoe Simpson, serving tables in the Acropolis. One street up, at Club 97, assistant manager Maeve Murphy said the biggest change was the sudden upturn in trade in the last few months. ''The area has changed. A lot of the pub type places have gone and have been replaced by upmarket wine bars. There are a lot of 'yuppies' with lots of money to spend,'' he said. ''But you cannot really define it by age groups. You still get youngsters, and the 18 to 25 bracket still come down here, and there are people a bit older too. You still get a real mix of people.'' What no one really seemed to know was what had happened to the throngs of younger drunken teenagers which used to gather on the pavements, many too young to get into clubs. ''They've gone, where I don't know, and I'm not quite sure why, but the police have been very active here,'' Mr Feldman said. ''It's sad that it's taken such a tragedy to get the kids off the street. I like to think their parents have reigned them in and found their kids an outlet.''