Abstract To the modernist and image building Chinese state, urban villages are unique but a transitional phenomenon of urbanization where peri-urban peasants have built substandard informal houses for low-income earners. Since the late 2000s, the Beijing government began forced redevelopment of urban villages at prime and strategically located sites. Potential of high value returns has enabled the municipal government to offer relatively high compensation rates, creating hence a new multimillion “propertied” class. While new estates have edged out low-income tenants, they have created “gentrified” resettlement communities with predominantly middle- to high-income high-tech tenants or owner-occupiers. Supported by site surveys, this paper examines this state-dominated property formalization and regularization process, and the ways in which informalities have been replaced by a sharp value uplift shared between local governments and local peasants. It is also noted that such replacement has created a new frontier of social inequalities where dislocated low-wage tenants have been eliminated and have to source affordable residence in more remote places. Policy implication of this paper is about how best to resettle them as equal citizens of the city.