Hong Kong's only dedicated arthouse cinema, the Cine-ArtHouse, is facing closure as its owner Sil-Metropole Organisation is havingdifficulty renewing the lease.

The two-screen cinema, locatedat the Sun Hung Kai Centre in Wan Chai on Hong Kong Island, programmes mainland Chinese, foreign-language and other kinds of arthouse and specialist cinema.

It has recently given long andsuccessful runs to films such as Italian epic The Best Of Youth, Michael Haneke's Hiddenand Chinese director Ning Hao's CrazyStone.

However, Sun Hung KaiProperties has informed Sil-Metropole that the cinema's lease will expire inNovember. It's understood the property giant has been charging the cinemafavourable rent for the past decade but wants to increase it in line with theterritory's soaring property prices.

"If this cinema goes, it's goingto make it even harder to distribute arthouse movies in Hong Kong," says Jennifer Hung, managing director of local distributor LuckyGems. "Some other cinemas occasionally programme arthouse films, but there'sreally not much room in the marketplace."

Of Hong Kong's three major exhibitors, only Edko Films' Broadway circuit regularlyprogrammes arthouse films. But independent distributors note that, as Edko isalso a distributor of both mainstream and arthouse fare, its cinemas are oftenbooked solid with its own product.

Also, Broadway's main venuefor niche and specialist films - the Broadway Cinematheque in Kowloon - is on the other side of the harbour from Hong Kong Island where the core audience for foreign-language cinema lives.

"We've found that the keydemographic for many of our films is on Hong Kong side and the audience doesn't cross the harbour to see a film," saysFirst Distributors' Hoi Wong who released Hidden.

Sil-Metropole said it wasunable to comment on the rental negotiations. Sun Hung Kai Properties alsodeclined comment.

Historically, many filmshave become surprise hits at Cine-Art House such as Japanese director ShunjiIwai's Love Letter, Mexican film Like Water For Chocolate and Iran's Children OfHeaven.

The cinema's current plight reflectswider problems in Hong Kong's cinema industry whichhas been fighting flat box office and declining audience interest for severalyears and is now being hit by illegal downloading.