Urbanisation in Xinjiang in the last two decades has been accompanied by immigration, a real-estate construction boom and changing residential patterns. This paper discusses how the construction of new residential compounds occurs simultaneously to the construction of social, spatial and ethnic belongings in oasis towns in southern Xinjiang with a particular focus on the city of Aksu. While investment considerations and the promise of a modernised urban lifestyle motivate citizens to purchase housing, the market-oriented real-estate business since the end of the 1990s also offers opportunities for Han and Uyghur residents to draw ethnic boundaries. The choice of a neighbourhood as well as the preference of interior design are frequently used to mark ethnicity. However, ethnic residential choices are restricted by work unit affiliation and the available socio-economic means. Thus, although discourses of Han and Uyghur residents display clear tendencies of ethnic segregation, urban residential spaces are in fact often ethnically mixed.