ON Monday, April 18, the Palace Theatre will be no more - after 15 years as Hong Kong's premiere and much loved cinema, the Shaw Brothers' showcase is to be turned into a commercial complex. The demise of the Palace is a reflection of the fate of large cinemas in the territory. They are set to go the way of the silent movie, making way for modern, commercial centres offering much more than just a big movie screen. The single cinema is also moving over for the multiplex set-up, which offers a one-stop blockbuster choice. The changing face of Hong Kong cinemas is a reflection of sky-rocketing rents, not a move dictated by audience demand, according to an accountant at Shaw Brothers, the entertainment company which has leased the Palace space from the World Trade Centre. ''The Palace was loved because the seats were huge and it was a very comfortable cinema, but that doesn't bring in money,'' a source at Shaw Brothers commented. While the space at the Causeway Bay site next to the Excelsior Hotel has changed hands many times, the two floors are to be taken over by Sun Hung Kai later this month and the development of the shopping centre will begin. Shaw Brothers exercised an option to extend its lease on the Palace five years ago, but this time around, there was no choice. The lease was up and the company was told to go. Shaw Brothers has taken the loss of the prime site graciously, accepting that the conversion of a single theatre into a group of shops amounts to a dramatic appreciation of rental return. ''It's purely a property thing,'' was one Shaw Brothers comment. Shaw Brothers has itself chosen to convert single large cinema spaces into more profitable centres - in 1992 it transformed the Pearl and Jade cinemas in Causeway Bay into mini cinemas within a shopping complex. It has also done the same to two large cinemas it owns in Singapore. The death of the 1,058 seater Palace was predicted back in 1992 when the site owner, the World Trade Centre Group, was reviewing its property portfolio. Sun Hung Kai bought the building early last year. At the same time the death knell was being sounded for the Palace, work began on the $150 million redevelopment of the Lee Theatre, also in Causeway Bay. Just this week one of the largest and oldest cinemas in Hong Kong, the 1,800 seat Chu Kong cinema in To Kwa Wan, closed its doors after 30 years. The cinema which had a leaning towards left-wing films, is scheduled to be pulled down for development. Peter Tsi, chief executive of the Motion Picture Industry Association, says as a cinema-goer he is saddened that cinemas like the Palace are being forced to be close. ''To see a film like Lawrence of Arabia or Doctor Zhivago should be a very grand experience and be shown in a place like the Palace. But at many of these small cinemas in the complexes, it is not much better than sitting at home and watching a movie on TV,'' he said. ''I think there is room for a grand theatre in Hong Kong and whoever opened it would have the monopoly because people want the atmosphere of a big movie house with very clear sound and comfort. Cinema-goers are looking for good quality.'' But there is a plus side to the development of the modern cinema experience, says Mr Tsi - for one thing the number of cinemas is on the increase. There are now 205 cinema screens in Hong Kong. Ten years ago there were only 140. ''Over the past three or four years, alternative films have had a much greater chance of being shown. Five or six years ago, it would have been almost impossible for a film such as The Piano to be shown in Hong Kong. For French and German films, also, itwas very difficult for them to survive at the cinema.'' He predicts the number of art or alternative films being screened will increase - ''It has proved a profitable business, something that no one would have dared to predict a few years ago.'' Mr Tsi also thinks that while the closing of theatres such as the Palace marks the end of an era, it could be good news for local independent film-makers. ''They will have more opportunity to produce films that are not in the main stream, have them distributed and give them a chance to be a hit.'' The Palace was favoured by Warner Bros as a cinema for premieres. Even though its prices were much higher than the UA Queensway, for example, Warner Bros marketing manager Indra Suharjono said the extra dollars were worth the grand scale appeal. She added: ''There are pros and cons to the closing of theatres like the Palace and the opening of three more smaller ones - it means we have no place to stage a grand opening, but it does mean many more films can be shown in Hong Kong.'' When UA opened Hong Kong's first multiplex cinema complex in Sha Tin at the new Town Plaza, people thought chairman Ira Kaye was making a big mistake. But as general manager Wendy Nam pointed out, ''We proved them wrong''. The multiplex concept is here to stay and will be the trend of the future, she predicted. ''At the time of opening, the location was quite quiet and people were thinking that it was too far out of the way to open six cinemas under one roof with 2,200 seats,'' said Ms Nam. ''There was also concern that we were not going to get sufficient product or the audience, or that the idea of six cinemas in one place was going to be acceptable to the cinema-going audience.'' The UA Sha Tin multiplex was successful beyond all expectations and remains the most profitable in the UA chain - it made just under $2 million of the $5 million made at all three UA sites last year. It also turned the sleepy New Town Plaza into a thriving shopping mall. ''Cinemas are a unique business,'' said Ms Nam. ''They are the only business which can draw a significant amount of people at any one time. The set up of cinemas within a shopping complex is mutually beneficial.''