Inclusive Socio-Spatial Transformation: A Study on the Incremental Renovation Mode and Strategy of Residential Space in Beijing’s Urban Villages

Abstract

This study investigates the incremental renovation of urban villages in Beijing, with a focus on the socio-spatial transformation of rental spaces. By integrating field surveys, building mapping, questionnaire research, and Kano model analysis, we identify key patterns and strategies for improving living conditions, preserving community culture, and promoting social integration. The main contributions of this study include (1) revealing the architectural characteristics and stages of incremental renovation of different rental spaces in urban villages and their diverse tenant needs, (2) applying the Kano model to prioritize tenant needs and guide targeted renovations, and (3) advocating an inclusive socio-spatial transformation strategy that balances development with the protection of vulnerable groups. This approach offers a sustainable alternative to radical urban renewal, ensuring dignified living conditions and opportunities for all residents.

1. Introduction

In the context of China’s rapid urbanization, urban villages, as former rural settlements surrounded by urban sprawl, have had a significant impact on the urban fabric through their informal settlement patterns and management modes [1]. Urban villages in metropolises such as Beijing, characterized by high-density buildings and dilapidated infrastructure, have a significant impact on the sustainability of the urban living environment and social structure [2]. Urban villages provide affordable housing for low-income and migrant worker groups, alleviating urban housing pressure [1,3].

However, in contrast to ’informal’ or ’slum’ settlements—typically excluded from formal infrastructure, services, or lacking legal land tenure—forms of housing deprivation in the global North are often obscured by the growing phenomenon of the ’hidden’ homeless [4,5,6]. These individuals may reside with other households in conditions that are inadequate or makeshift [5,6]. Such living arrangements span a spectrum, from overcrowded or deteriorating units to unauthorized garage conversions and unregistered boarding houses. They are frequently concealed from public view due to violations of zoning laws, building codes, or occupancy regulations. While occasionally brought to light through media coverage or city enforcement efforts, governmental responses tend to be punitive in nature, often resulting in fines for landlords and evictions for tenants. This creates a critical tension for both researchers and policy practitioners: revealing such situations, in the absence of safe and stable housing alternatives, may further endanger already vulnerable residents. Even establishing terminology for these housing conditions—and determining appropriate methods for studying and addressing them—raises a host of intricate challenges [6].

The rapid and uncontrolled expansion of informal settlements is significantly degrading urban environments, lowering residents’ quality of life, and undermining urban cohesion. This escalating challenge has heightened the need for sustainable approaches to informal settlement improvement, especially in developing countries. Among proposed measures, affordable housing emerges as a practical and impactful solution. It provides low-cost, sustainable shelter, improves living conditions, and reduces long-term upkeep expenses—all within the fiscal reach of many Global South governments. Nevertheless, affordable housing remains underrepresented in informal settlement policy debates [7]. Existing scholarship often interprets such interventions through the lens of entrepreneurial governance, emphasizing land revalorization that benefits political and economic elites. This dominant narrative frequently neglects the varied policy tools and strategies local governments employ to manage informal urban expansion [8].

The urban village has provided cities with a large quantity of low-cost labor and affordable housing, easing the pressure on urban housing. Many residents in urban villages earn income by renting out their houses, forming a unique “landlord economy”. Urban village renovation is the key to achieving livable city building, but the current government-led radical renovation model has many problems, such as exacerbating social injustice and destroying cultural heritage [9,10]. The government plays a leading role in the urban renovation process, carrying out rapid urban transformation through mandatory policies and large-scale investment. This model has been more common in some urban renovation projects in the past, such as large-scale renovation of old cities, demolition and renovation of urban villages, etc. [11].

To this end, an inclusive and incremental renovation model has been advocated, focusing on small-scale and organic renovation, respecting and protecting the rights and interests of vulnerable groups, and promoting social integration and cultural heritage [3,12]. Incremental development is central to affordable housing, often blending formal and informal approaches. Urban villages, supported by communal resources and localized governance, are particularly suited to adopt and implement these gradual housing strategies [11]. The model emphasizes bottom-up renovation, addressing power imbalances and broken social bonds through social network interventions, with the aim of achieving social justice and preserving cultural diversity [11].

The concept of inclusiveness is rooted in ancient philosophies such as Confucianism and ancient Greek humanism, which emphasized individual dignity and development [13]. The modern concept of inclusive growth was introduced by the Asian Development Bank in 2007, arguing that economic growth should benefit all segments of society, especially vulnerable groups, in order to share the fruits of economic globalization [14,15].

In response to mounting global challenges, the United Nations has designated the current decade as a “decade of action” to fast-track progress toward the 17 Sustainable Development Goals (SDGs) set in 2015. These goals aim to protect the environment, eliminate poverty and inequality, and promote peaceful, prosperous societies. Within this framework, SDG 11.1 highlights the importance of safe, affordable housing, positioning sustainable urban development as a key objective for developing countries. This target specifically addresses the persistence of slums and informal settlements as markers of urban inequality [16]. As urbanization accelerates across the Asia-Pacific, SDG 11 offers a strategic framework for reshaping urban planning, financing, and governance in alignment with the New Urban Agenda [17].

One of the major challenges for future urban planning is, thus, to prepare urban spaces for an increasing number of people, while developing and maintaining cities as sustainable and livable places [18]. In urban renovation strategies, incremental renovation is opposed to radical transformation, advocating small-scale, gradual organic improvements that respect the culture and social structure of the neighborhood in order to enhance the quality of life of residents [3,12]. In contrast, radical transformation, while seeking rapid improvement of the living environment, can neglect social equity, leading to higher housing costs and forced displacement of tenants of the old housing project, who are dispersed and face higher living costs [1]. The inclusive renovation model emphasizes the protection of the rights of vulnerable groups and promotes sustainable development through the creation of safe and inclusive urban spaces [19,20]. This inclusive transformation model and progressive renewal method are designed to protect the right of tenants and other vulnerable groups to obtain adequate housing.

The right to adequate housing can be traced to the Universal Declaration of Human Rights, which was unanimously adopted by the world community in 1948 [21]. In the academic field, the concept of adequate housing has also been widely studied and discussed, and many scholars have explored the theory and practice of adequate housing from different perspectives. A “quality-based” measure of housing affordability problems employing the criterion of the cost of housing just meeting adequacy standards is proposed as an improvement over the conventional “high” rent-to-income criterion [22]. The low-income population engages in various informal actions that lead to spatial transformation, unregulated densification, illegal home renovations, housing extensions and improvements, and informal peri-urbanization [23]. These actions are intrinsically linked to the concept of adequate housing, as they exemplify the efforts of the low-income population to secure housing that meets their basic needs amidst the insufficiencies of the formal housing sector. This underscores the pivotal role of informal housing in addressing the housing needs of the low-income population and highlights the pronounced development disparities between different neighborhoods.

Despite the extensive literature on urban villages and informal settlements, there remains a significant gap in understanding the mechanisms and strategies for inclusive socio-spatial transformation, particularly focusing on rental spaces within these areas. While previous studies have highlighted the importance of urban villages in providing affordable housing and the challenges they face, few have explored the specific patterns and strategies of incremental renovation of rental spaces in urban villages, especially in the context of China. This study aims to fill this gap by focusing on the incremental renovation of rental spaces in urban villages in Beijing, with a particular emphasis on the needs of low-income and migrant populations.

The originality and concrete contribution of this paper lie in its comprehensive approach to understanding the formation mechanisms and patterns of rental spaces in urban villages. By employing a combination of field surveys, building mapping, typological analysis, and the Kano model for tenant needs assessment, this study provides a detailed and nuanced understanding of the socio-spatial dynamics in urban villages. The findings reveal the dual role of urban villages in providing affordable housing and generating rental income, while also highlighting the need for inclusive and incremental renovation strategies to improve living conditions and preserve community culture.

The purpose of this study is to explore the mechanisms and strategies for inclusive socio-spatial transformation in urban villages, focusing specifically on rental spaces. The aim is to propose practical and sustainable solutions that can enhance living conditions, promote social integration, and ensure the right to adequate housing for all residents. By addressing these objectives, this study contributes to the broader discourse on sustainable urban development and the role of informal settlements in providing affordable housing, not only in China but also in other regions facing similar urban challenges.

2. Study Area

The study area focuses on two townships in the Green Isolation Area of Beijing, namely, Shibalidian Township and Cuigezhuang Township in Chaoyang District. They have unique geographical locations and socio-economic characteristics being in the process of urbanization and represent the current situation of urban villages in the Beijing area. According to the seventh national census of China in 2020, Chaoyang District in Beijing has a resident population of 3,452,460, of which 2,171,713 or 62.9 per cent are local household residents and 1,280,747 or 37.1 per cent are transient (Bulletin of the Seventh National Population Census of Chaoyang District, Beijing, China).

With regard to the two townships in which the study area is located, Shibalidian Township has a resident population of 178,177, of which 32,092, or 18.01 percent, are local residents, and 146,085, or 81.99 percent, are mobile residents (Source: Population of Shibalidian District Population Data from the Seventh Census of 2020 Web site: https://www.hongheiku.com/xzlishi/22330.html (accessed on 24 August 2024)).

Cuigezhuang Township has a resident population of 107,029, of which 19,168, or 17.91 percent, are local residents and 87,861, or 82.09 percent, are migrants. (Source: Population of Cuiguozhuang District Population Data from the Seventh Census of 2020 Web site: https://www.hongheiku.com/xzlishi/22340.html (accessed on 24 August 2024)).

China’s household registration system plays a key role in urban management and population control, especially in cities like Beijing, where settlement is strictly controlled. The household registration system helps to prevent pressure on resources and the environment caused by excessive population growth. However, the demand for low-end labor in cities has boosted the development of service-oriented industries and attracted a large number of migrant populations. These populations have become migrant populations without household registration due to difficulties in fulfilling the conditions for settling down, and they are unable to enjoy public services such as education, healthcare, social security, and guaranteed housing, but are faced with high property prices and rents in the cities, with the average rent in Beijing in the first half of 2024 being 107.9 RMB/m²/month (Source: 58Anjuke Research Institute Web site: https://ai.anjuke.com/introduce/hydc?type=2 (accessed on 24 August 2024)), the highest among all cities in mainland China. This low income and high existential pressure reflect the special situation of low- and middle-income people in megacities.

Urban villages provide low-cost housing for these low-income groups, meeting the needs of low-income people at lower rents, albeit in conditions below government standards, and enabling them to maintain a basic life in the city. The two townships in Chaoyang District have a large proportion of migrant populations, whose demand for rental housing drives the transformation of urban villages. The study selected six representative urban villages, including those in Shibalidian Township and Cuigezhuang Township, and conducted field research and mapping of 18 building samples. These samples show the diversity and problems of rental spaces in urban villages, including differences in building forms, functional layouts, and rental methods.

3. Methods

The primary objectives of this study are to analyze the formation mechanisms and patterns of rental spaces within Beijing’s urban villages and to evaluate the impact of incremental renovation strategies on living conditions, with a particular focus on mitigating the increase in living costs for tenants. This study innovatively combines field surveys, building mapping, questionnaire research, and Kano model analysis to examine rental space renovation in urban villages from physical, tenant needs, and socio-cultural perspectives.

This multidimensional approach employs a multi-framework approach to explore the inclusive socio-spatial transformation of urban villages in Beijing. Through architectural mapping, we document the physical characteristics and spatial configurations of rental spaces. Typological analysis is used to classify and understand the diversity of building forms and functional layouts, revealing their adaptability. Questionnaire surveys directly gather tenants’ satisfaction and needs regarding their living conditions. The Kano model is then applied to prioritize these needs, optimizing renovation strategies. These frameworks complement each other, addressing the physical environment, social needs, and economic feasibility from multiple dimensions. By employing these methods, the study seeks to explore viable incremental regeneration models and strategies for urban villages, identify key factors influencing their success, and propose inclusive transformation strategies that prioritize the improvement of living environments and quality of life while ensuring that renovation efforts do not impose undue financial burdens on tenants (Figure 1).

3.1. Field Research and Building Mapping

We conducted a comprehensive field survey of urban village rental spaces in Beijing’s Chaoyang District’s Shibalidian Township and Cuigezhuang Township, documenting the physical and environmental attributes of these urban village spaces and capturing the complexity of their floor plans, spatial configurations, and functional divisions. The fieldwork consisted of a meticulous examination of a sample of 18 buildings (

Table 1. Statistics of architectural surveying and mapping samples in the research area.

Ma2-1	Ma3-1	Ma3-2	Ma3-3
Lao-1	Lao-2	He-1	He-2
Fei-1	Fei-2	Shi-1

, Figure 2), each of which was subjected to a comprehensive documentation process that included on-site inspections, photographic documentation, and precise measurements, of which 11 were selected for beam surveying and detailed architectural drawings. The buildings surveyed included three buildings in the town of Shibalidian and eight buildings in the town of Cuigezhuang. The selection criteria were based on the diversity of building types and the need to cover a wide range of tenanted space features.

Measuring and recording dimensions, identifying structural elements, and mapping the flow of space within and around the buildings ensured that drawings were produced that detailed the internal layout, including room configurations, circulation paths, and the location of amenities, providing a comprehensive architectural overview of each of the sampled buildings. The data collected from this work will play a key role in the development of progressive regeneration and inclusive transformation strategies for Beijing’s urban villages that aim to improve livability while preserving the unique socio-economic fabric of these neighborhoods.

3.2. Typological Analysis

Typological analysis in architecture originates from ancient Greece, with the term ’Type’ stemming from ’Typos’, denoting classification and cognition. Vitruvius pioneered its application in architecture through his “Ten Books”. Aldo Rossi advanced typology in “Urban Architecture” (1966), highlighting historical continuity and collective memory, thereby establishing typology’s theoretical foundation in architecture. Neo-rationalism, influenced by Rossi, revitalized typology, linking it to urban form and context, and advancing architectural theory [24]. These concepts underpin architectural typological analysis, offering theoretical support for practice and research.

The typological approach is applied to the classification and comparison of a sample of buildings in urban village rental spaces with the aim of identifying their prototypes, types, textures, and patterns. Within a shared form typology, different neighborhoods may share similar social contexts, resulting in the confrontation of comparable governance issues or challenges [25]. This analysis reveals commonalities and differences between the samples and deepens understanding of their social, economic, and policy contexts [26,27].

Architectural typology is defined as the systematic study of patterns of architectural form, structure, and spatial organization, encompassing the classification of architectural elements and their interactions in different cultural and environmental contexts, as well as architectural responses to social needs and cultural values [28].

Building typology analysis methods include morphological analyses, such as plan layout, façade composition, and spatial organization, as well as studies of the development and change of buildings in their socio-cultural contexts. These methods reveal the complex relationship between buildings and their environments and provide guidance for design and planning [29,30]. The strengths of typologies lie in a deep understanding of building form and function, supporting sustainable practices, and promoting the preservation of local character [27,31].

Architectural typology, when applied to informal settlements such as urban villages, offers a systematic approach to understanding the patterns of architectural form, structure, and spatial organization within these contexts. It contributes to the development of a theoretical framework to address and explain all human behavior toward or linked with buildings, dwellings, and settlements, in terms of both creating and using such environments [32]. Studies have shown that incremental construction is a primary agent for progressive development in informal settlements, with the typological approach revealing the stages of housing development from informal to formal. The typology of urban households and their transition from informal to formal status has been a significant area of research, highlighting the importance of understanding the morphological and functional characteristics of these settlements. This approach is crucial for developing effective housing interventions and sustainable policy decisions in developing countries, where informal settlements are prevalent [33].

In the study of urban villages, typological analysis helps to understand the process of urbanization of informal built forms, revealing the opposition between self-organized development patterns and formalized urban development. Typologies support urban renovation and community development strategies [14,34], play a key role in informal settlement studies, and provide valuable perspectives for urban planning and architectural design.

3.3. Questionnaire and Kano Model for Tenants’ Needs Assessment Methods

The Kano model (Figure 3), originated by Noriaki Kano, classifies quality attributes into five categories affecting customer satisfaction: Must-be, One-dimensional, Attractive, Indifferent, and Reverse qualities [35]. In urban studies, particularly regarding urban villages, the model provides a structured approach to prioritizing resident needs amidst varying satisfaction levels [36]. It has been integrated into architectural design to measure quality in mass-housing units, offering a new evaluation perspective for design quality, which is challenging to assess due to its flexible nature and evolving user perceptions [37].

Our research opts for the Kano model due to its nuanced categorization of quality attributes, which allows for a detailed analysis of how specific environmental and housing attributes influence resident satisfaction. This is distinct from other models that may offer a less granular view of satisfaction dynamics. The Kano model’s ability to distinguish between basic necessities and exciting qualities makes it particularly suited for our study on urban village revitalization, where understanding the spectrum of resident needs is crucial for effective policy and design interventions. This approach offers a more comprehensive understanding compared to models that might only focus on linear relationships between attributes and satisfaction [38].

The study was conducted from October 2022 to March 2024. Questionnaire criteria were determined based on field visits and expert discussions. We mainly focus on user satisfaction and building performance assessment during the development and distribution of the survey questionnaire. By designing and distributing questionnaires (Appendix A), data on the needs and satisfaction of users of leasing space in urban villages were collected, and a total of 243 valid questionnaires were obtained.

These questionnaires selected five categories as primary demand indicators, and each primary demand indicator contains several secondary demand indicators, as shown in

Table 2. Construction of Kano Model evaluation system for rental space in urban village.

Level 1 Indicators	Level 2 Indicators	Kano Model Category	Theoretical Construct
Basic facilities for rental space (U1)	(u1-1) Area of rental space	One-dimensional (O)	Basic living needs
	(u1-2) Size of rental housing (number of households)	Must-be (M)	Social equity and affordability
	(u1-3) Floor area ratio of the house (density level)	Reverse (R)	Environmental sustainability
	(u1-4) Layout rationality of the house	One-dimensional (O)	Spatial efficiency
	(u1-5) Area of common spaces in houses (foyers, corridors)	Must-be (M)	Community interaction
	(u1-6) Housing accessibility	Must-be (M)	Inclusivity
Building performance of rental space (U2)	(u2-1) Ventilation performance of the house	One-dimensional (O)	Health and comfort
	(u2-2) Closed doors and windows of the house	Must-be (M)	Safety and security
	(u2-3) Winter protection of the house	Must-be (M)	Basic living needs
	(u2-4) Summer thermal performance of the house	One-dimensional (O)	Health and comfort
	(u2-5) Lighting performance of the house	One-dimensional (O)	Health and comfort
	(u2-6) Number of indoor lighting fixtures	One-dimensional (O)	Health and comfort
	(u2-7) Sound insulation performance of walls and floors	One-dimensional (O)	Health and comfort
	(u2-8) Soundproofing performance of windows and doors	One-dimensional (O)	Health and comfort
Quality of equipment in rental space (U3)	(u3-1) Quality of noise protection materials	One-dimensional (O)	Health and comfort
	(u3-2) Number of light and ventilation facilities in kitchens and bathrooms	Must-be (M)	Basic living needs
	(u3-3) Quality of kitchen and bathroom electrical equipment	Must-be (M)	Basic living needs
	(u3-4) Safety and quality of housing renovation	Must-be (M)	Safety and security
	(u3-5) Number of housing security monitoring facilities	Must-be (M)	Safety and security
	(u3-6) Number of fire-fighting facilities in houses	Must-be (M)	Safety and security
Facilities for outside activities in rental space (U4)	(u4-1) Area of outdoor space	Attractive (A)	Recreational needs
	(u4-2) Number of outdoor wind and rain shelters	Attractive (A)	Recreational needs
	(u4-3) Number of outdoor street trees	Attractive (A)	Environmental quality
	(u4-4) Number of outdoor green separation belts	Attractive (A)	Environmental quality
	(u4-5) Number of public accessible facilities	Attractive (A)	Community interaction
	(u4-6) Number of public staircases	Attractive (A)	Accessibility
External transport facilities for rental space (U5)	(u5-1) Width of outdoor pavement	Must-be (M)	Accessibility
	(u5-2) Size of outdoor bicycle parking area	Attractive (A)	Transportation convenience
	(u5-3) Number of bus stops or metro stations	Attractive (A)	Transportation convenience
	(u5-4) Number of shared vehicles and parking spots	Attractive (A)	Transportation convenience
	(u5-5) Number of motor vehicle parking spaces	Attractive (A)	Transportation convenience

. The Level 1 and Level 2 indicators are designed to comprehensively evaluate the rental space in urban villages based on the Kano model and other relevant theoretical constructs of leasing space in urban villages in Beijing. Must-be (M) indicators, like housing accessibility and safety features, are crucial for basic living standards and tenant safety, forming the baseline for rental space quality. One-dimensional (O) indicators, such as ventilation and lighting performance, directly affect tenant comfort and health, enhancing the overall quality of life. Attractive (A) indicators, including outdoor green belts and public transport access, boost the rental space’s appeal and convenience, leading to higher tenant satisfaction. Indifferent (I) and Reverse (R) indicators, like the floor area ratio, are also evaluated to provide a complete assessment, considering potential drawbacks, such as high-density housing’s negative impact on satisfaction.

For each of the secondary demand indicators, the questionnaire has two evaluation questions, positive and negative. For each evaluation question, there are five comment set options, as shown in

Table 3. Evaluation table of Kano model for rental space in urban village.

Demand Indicators	Evaluation Topics	Commentary Set Options (Points)
		Love it (5)	Inevitable (4)	Indifferent (3)	Grudgingly (2)	Dislike (1)
Area of rental space (u1-1)	If there is an increase in square footage your rating is:
	If there is no increase in area your rating is:

. The users’ responses to the two questions were analyzed to summarize the users’ opinions, with a total of 25 possible outcomes for each demand indicator, as shown in

Table 4. Kano evaluation table.

	The Building Does Not Provide a Functional Element
Demand Indicators	Love it	Inevitable	Indifferent	Grudgingly	Dislike
The Building Provides a Functional Element	Q	A	A	A	O
love it	Q	A	A	A	O
inevitable	R	I	I	I	M
indifferent	R	I	I	I	M
grudgingly	R	I	I	I	M
dislike	R	R	R	R	Q

A = Attractive; O = One-dimensional; M = Must-be; I = Indifferent; R = Reverse; Q = Questionable.

.

For the satisfaction summary of the Kano model, a Better-Worse coefficient analysis is commonly used to summarize it [39], and the formula is as follows:

$$\mathrm{Better}\left(SI\right)={\displaystyle \frac{A+O}{A+O+M+I}}$$

(1)

$$Worse\left(DSI\right)={\displaystyle \frac{-(M+O)}{A+O+M+I}}$$

(2)

If the Better coefficient is positive, it indicates that user satisfaction increases when a feature or service is provided. If the Worse coefficient is negative, it indicates that user satisfaction decreases when a feature or service is not provided [40].

4. Results

4.1. Architectural Characteristics of Urban Villages

4.1.1. High-Density Residential Buildings with Dilapidated Infrastructure

Residential buildings in urban villages are extremely dense and are usually built by villagers who build multi-story houses on their original home sites to generate rental income (Figure 4). As landlords seek to maximize rental income, self-built houses in urban villages tend to undergo continuous horizontal and vertical replication and internal division, resulting in high building densities and small living spaces.

The infrastructure in urban villages is often old, and the quality of construction varies. The lack of regulation of spontaneous construction has led to the emergence of many poorly constructed houses, some of which lack the necessary facilities, such as ‘black rooms’ with poor lighting and ventilation, and some of which are too small to accommodate bathrooms and kitchens. Public spaces in urban villages are also often crowded due to high building densities.

4.1.2. Spatial Composition of the Monolithic Building: Architectural Prototypes of “Homeowners’ Space” and “Rental Space”

According to the mapped samples, a self-built house in an urban village can be divided into the “homeowners’ space” and the “rental space”, and most of the self-built houses can be divided into two prototypes, “homeowners’ space” and “rental space”. However, some self-built houses can only be classified into the prototype of “rental space” (

Table 5. Prototypes of “homeowner space” and “rental space”.

Prototypes of “homeowner space”
Lao-1	Lao-2	Ma3-2	Ma3-3	He-1
Single prototype of “rental space”
Shi-1	Ma2-1	Ma3-1	He-2	Fei-1	Fei-2

).

The building space in urban villages consists of “homeowners space” for landlords and “rental space” for tenants, each catering to different needs (Figure 5). “Homeowner space” is larger in size and provides privacy and a favorable living environment. In contrast, “rental space” is smaller and has basic features but may lack certain amenities. To cater to lower-income groups, rental units are expanded through replication to provide affordable housing. The transformation of urban villages needs to balance the interests of landlords and tenants, adopting low-impact strategies to control rents and ensure social equity and sustainability. Renovation should focus on spatial rationality and affordability to ensure a balance between basic housing needs and the market.

4.2. Incremental Renovation

4.2.1. Three Stages of Incremental Renovation in Beijing’s Urban Villages

China and the Beijing Municipal Government have gradually shifted their urban renovation policy from the past model of large-scale demolition and construction to a more sophisticated and sustainable renovation strategy (The People’s Government of Beijing Municipality web: https://www.beijing.gov.cn/zhengce/gfxwj/202205/t20220518_2715630.html (accessed on 24 August 2024)) (

Table 6. Policies related to incremental renovation in Beijing.

Policy	Content
Circular of the Ministry of Housing and Urban-Rural Development on Preventing the Problem of Large-scale Demolition and Construction in the Implementation of Urban Renovation Actions, Jianke [2021] No. 63	Instead of large-scale, piecemeal, and concentrated demolition of existing buildings, the demolition of building area within an urban renovation unit (district) or project should, in principle, not exceed 20 percent of the total building area of the existing building. It encourages the classification and prudent disposal of existing buildings and the implementation of small-scale, progressive organic renovation and micro-remodeling.
Beijing Urban Renovation Action Plan (2021–2025) 21 August 2021	Through small-scale, progressive, and sustainable renovation and strict control of large-scale demolition and construction, we will promote the continuous improvement and optimization of urban functions and spatial forms.
Beijing Urban Renovation Special Plan (Beijing Urban Renovation Plan for the 14th Five-Year Plan Period) 10 May 2022	Strictly controlling large-scale demolition and construction, realizing the renovation of residential categories such as bungalow compounds and old districts, and realizing the renovation of public services, transport, municipal, and security facilities through neighborhood coordination so as to enhance the carrying capacity of the city.

).

This urban renovation and renovation policy has been constantly evolving and improving in line with the needs of urban development, reflecting Beijing’s strategy and direction in urban village transformation, which aims to achieve high-quality urban development and improve the quality of life of residents.

The process of incremental renovation of Beijing’s urban villages can be divided into three stages: the initial stage, the development stage, and the diversification stage.

The initial stage is characterized by the slow multiplication and replication of “rental space”, with buildings mainly in a courtyard layout and some spaces converted to rental use.

The development stage witnesses the horizontal expansion and vertical replication of “rental space”, with an increase in the number of floors of buildings and the formation of high-density multi-storey buildings. Competition among villagers to build has led to the narrowing and densification of rental space, and the government’s control over later building behavior has been weakened. Restrictive building height requirements in different villages lead to diversity in building samples.

In the diversification phase, leasing space in urban villages continues to experience horizontal and vertical replication and internal fragmentation, with leasing profits driving villagers to increase leasing space despite the local government’s intensified efforts to regulate unauthorized building works. The growth rate in this phase is relatively flat, but the types of leasing spaces are gradually diversifying. For example, the height restrictions on buildings in Laojuntang and Maquanying villages (Beijing Municipal People’s Government on the implementation of the guiding opinions on strengthening the management of rural residence bases and housing construction: Beijing Zheng Fa [2020]. No. 15 Source: https://www.beijing.gov.cn/zhengce/zhengcefagui/202008/t20200811_1979059.html (accessed on 24 August 2024)): The area of the base of the house built by villagers shall not exceed 75 percent of the area of the residence base, and the height of the eaves of the house (calculated from the upper plane of the house’s base) shall not exceed 7.2 m in principle. The vertical drop projections and steps of the houses in all directions (including dripping) should be controlled within the boundaries of their own house bases. This resulted in temporary installations on the first-floor roofs, which were considered unauthorized but could not be forcibly removed for historical reasons. Overall, the evolution of leasing space in the renovation process of urban villages reflects the dynamic game relationship between the villagers’ pursuit of interests and government control.

4.2.2. The Evolution of Architectural Space

In the context of urban village renovation, driven by policy and funding, self-built houses are altered and extended to improve their appearance and adjust the layout of the “homeowners’ space” and “rental space” (Figure 6). Landlord-occupied “homeowner space” is expanded by adding more floors, and when restricted, it is transformed into “rental space”, commonly, a three-story structure used for storage or rental, reflecting the landlord’s motivation to pursue financial gain.

“Rental space” is mostly located at the edge of the house, not only expanding upwards but also extending horizontally, such as the second-floor overhang, which is subject to collective control by the village. In order to maximize profits, landlords subdivided or rented out the “rental space” to “second landlords”, who might further renovate it to increase revenues (Figure 7). While this model provides accommodation for low-income groups, the unregulated behavior of “second landlords” can undermine the health of the rental market by pushing up rents or creating substandard living conditions.

4.3. Analysis of Types of Rental Space

4.3.1. Six Basic Spatial Units

According to the criterion of whether the use of the kitchen and bathroom and the mode of travel in the ’rental space’ is independent, three types of space units can be defined: independent-use space units, shared-use space units, and mixed-use space units; and according to the criterion of whether the structure of the “rental space” building is independent, three types of space unit can be defined: attached space unit, separated space unit, and fuzzy space unit, making a total of six types of space units (

Table 7. Six basic spatial units and their characteristics.

Type	Image	Features
independent-use space units		Provision of full kitchen and bathroom facilities Protect tenants’ privacy and independent traveling Commonly found in self-built houses in urban villages Higher price (RMB 2000–3000) Affected by space size, accessibility and location
shared-use space units		Lack of separate kitchens and bathrooms Tenants need to share common facilities Easy to cause confusion Low rental price (600–800 RMB) Attractive to low-income permanent workers
mixed-use space units		Partial provision of kitchen and bathroom facilities Tenants use public or private facilities High room density, some rooms are small Moderate rental price (1000 RMB) Suitable for tenants who cannot afford higher rents
attached space units		The structure of the building is closely linked to the ’homeowner’s space’ Clear master-slave relationship Higher quality of tenancy Commonly found in self-built houses on homesteads Reduced economic conflicts with neighbours
separated space units		’Rental space’ is structured independently of the ’owner’s space’ Tightly knit ’rental space’ May be rented out as a block or managed by an agent Poor construction quality and susceptibility to partitioning Unauthorized features such as external staircases and projecting spaces
fuzzy space units		Structurally complex, partly dependent on the ’owner’s space’ Partly independent or shared with neighbouring buildings Based on blood relations Ground floor attached to the main structure, upper floor extended to utilize relatives’ space

).

4.3.2. Nine Types of Rental Space

In the context of the detailed analysis of the six basic spatial units identified in urban village rental spaces, we further combine these units into nine distinct types of rental space (Figure 8,

Table 8. Logical diagram of 6 units forming 9 types of rental space.

	Attached	Separated	Fuzzy
independent-use
shared-use
mixed-use

). These rental space types range from independent-use spaces with full amenities to shared-use spaces with limited facilities, and from attached units closely linked to the homeowner’s space to fuzzy units with complex ownership and spatial relationships. Each type reflects unique spatial characteristics, living conditions, and target tenant groups, revealing how urban villages adapt to varying market demands and tenant needs through incremental renovation and spatial transformation (

Table 9. Nine types of rental space.

Type	Spatial Unit	Sample		Key Features	Target Tenants
	Criteria	Code	Plan
1. Independent use-Attached	Independent use, attached structure	Ma3-3		Connected to the “homeowner’s space” Features private kitchen and bathroom Better privacy Higher rent (2000–3000 RMB)	Tenants who value privacy and living quality
		Lao-1
2. Independent Use - Separate	Independent use, separate structure	Ma2-1		Structurally independent from the “homeowner’s space” Private kitchen and bathroom Often managed by sub-landlords Densely partitioned Poor ventilation/lighting Higher rent (around 2000 RMB)	Tenants who value privacy but can accept some shared elements
		Ma3-2
		Fei-1
		Fei-2
3. Independent use—fuzzy	Independent use, structurally complex	He-2 1F		Complex structure with partial independence (e.g., some floors share bathrooms) Limited privacy Moderate rent (around 1000 RMB)	Tenants who can accept partial sharing of facilities
		He-2 3F
4. Shared use -Attached	Shared use, attached structure	He-2 2F		Attached to the “homeowner’s space” Lacks private kitchen/bathroom Relies on shared facilities Low rent (600–800 RMB)	Low-income tenants who can accept shared facilities
5. Shared use-Separate	Shared use, separate structure	Lao-2		Independent structure from “homeowner’s space” Shared facilities (e.g., corridors) Crowded Targets low-income long-term tenants Low rent (600–800 RMB)	Tenants who need some independence but are rent-sensitive
		Fei-1 2F
		Fei-1 3F
6. Shared use-fuzzy	Shared use, structurally complex	Fei-1		Located at building edges Small spaces Shared facilities Unclear ownership (e.g., unauthorized extensions) Poor conditions Lowest rent (600–800 RMB)	Rent-sensitive tenants who can accept poor environments
		Fei-2 4F
7. Mixed use-attached	Mixed use, attached structure	Ma3-1		Typically leftover spaces (e.g., “stairwells”) Offers private bathroom but no kitchen Moderate rent (around 1000 RMB)	Tenants who value space utilization
8. Mixed use-separate	Mixed use, separate structure	Ma2-1		Modified by sub-landlords Compact living units feature a singular bathroom Lack a dedicated kitchen area Cooking facilities integrated into the bedroom spaces Moderate rent (around 1000 RMB)	Tenants who need a balance between rent and space utilization
		Ma3-3
		Fei-1
		Fei-2
9. Mixed Use - Fuzzy	Mixed use, structurally complex	Fei-2		Highly shared facilities (e.g., kitchen merged with bedroom) Ambiguous structure Worst privacy/environment Lowest rent (600–800 RMB)	Rent-sensitive tenants who can accept poor environments

).

Type 1: Independent use–attached rental space: Lao-1, Ma-3-3

This rental space type is independent of the “homeowner’s space”, forming enclosed layouts with separate kitchens and bathrooms. While centrally located units are well ventilated and lighted, edge units often suffer from poor ventilation and lighting. Maquanying Village’s self-built houses typically feature “L” or “C” shaped layouts, with each rental unit having kitchen and bathroom. Despite shared spaces on the third floor, overall lighting and ventilation are better than in townhouses (Figure 9). However, the close proximity of houses and horizontal replication of rental spaces reduce privacy.

Type 2: Independent use–separate rental space: Ma2-1, Ma3-2, Fei-1, Fei-2

This type is created by landlords converting self-built houses into rental units or leasing them to agents who subdivide the space. The exterior resembles attached rental spaces, but the interior consists entirely of rental units connected by corridors, forming a condominium-style layout (Figure 10). Each unit has independent access but shares corridors, resulting in poor lighting and ventilation. For instance, Ma2-1’s middle units have high windows facing corridors, limiting outdoor air exposure. Despite these conditions, landlords or agents may still offer separate kitchens and bathrooms, commanding higher rents (about RMB 2000).

Type 3: Independent use–fuzzy rental space: He-2 first and third floors

This type features ambiguous structures straddling multiple landlords’ self-built houses, common in loosely regulated villages. He-2’s rental spaces vary by floor, with shared travel routes on the first and second floors and shared kitchens and bathrooms on the third floor, offering insufficient privacy and environmental protection. Unconstrained spontaneous construction continues to encroach on available resources.

Type 4: Shared use–attached rental space: He-2, 2nd floor

This type features ambiguous structures straddling multiple landlords’ self-built houses, common in loosely regulated villages. He-2’s rental spaces vary by floor, with shared travel routes on the first and second floors and shared kitchens and bathrooms on the third floor, offering insufficient privacy and environmental protection. Unconstrained spontaneous construction continues to encroach on available resources.

Type 5: Shared use–separated rental space: Lao-2, Fei-1, second and third floors

This rental space type, found in unrenovated traditional buildings, is structurally independent yet situated within the “homeowners’ space”. Tenants share routes with landlords and rely on public facilities, lacking private kitchens and bathrooms. Being inexpensive, it attracts low-income laborers. For instance, Lao-2 features a traditional appearance with the landlord in the main room and renters in the east and west rooms, sharing an awning and washroom (Figure 11). Similarly, Fei-1’s second and third floors lack private facilities, offering poor conditions.

Type 6: Shared use–fuzzy rental space: Fei-1, Fei-2, 4th floor

The main characteristics of this type of rental space are that the ’rental space’ for shared use is located on the edge of a self-built house, in a poor environment, with small spaces and unclear ownership. For example, unauthorized building works in Fei-1 have led to unclear ownership, and the shared wall on the north side of the building forms an east-west ‘road’, increasing privacy and security risks. Tenants must use public toilets, which is inconvenient. The four-story unauthorized rental space of Fei-2 is structurally independent, faces the risk of demolition, and also relies on public facilities (Figure 12). These conditions reflect the prevalence of unauthorized building works in an urban village where control is lax.

Type 7: Mixed use–attached rental space: Ma3-3

Mixed-use attached rental spaces, commonly referred to as ‘stairwells’, are usually located at the corner or the boundary of a building and are small spaces left over after the landlord has duplicated other spaces. These spaces are small but usually have bathrooms and lack kitchen facilities. They are prevalent in urban villages and attract specific groups of tenants at low prices, especially those who value a separate bathroom over full kitchen and bathroom facilities.

Type 8: Mixed use–separated rental space: Ma3-1, Ma2-1, Fei-1, Fei-2

This type of rental space is independent of the “homeowner’s space” and is commonly found in homes that have been converted by second homeowners. These spaces are too small to provide full kitchen and bathroom facilities, usually only a bathroom, with the kitchen function replaced by a makeshift table, chairs, and kitchenware (Figure 13).

Type 9: Mixed use–fuzzy rental space: Shi-1

The main characteristic of this type of rental space is that each small-scale “rental space” has a different ownership relationship, i.e., it is attached to a structure that is not the same building, and this structural ambiguity is based on blood relations and private interests. Because of their small size and chaotic location, most of the “rental spaces” are the result of residual space left over from the division of space and are equivalent to “patches” within a building, with poor living conditions.

The way these building types are assembled in Beijing’s urban villages reveals the evolutionary process and trend of incremental renovation of urban villages in the process of urbanization. By carefully categorizing and analyzing the six basic spatial units of urban village buildings, it is possible to observe how the different units affect tenants’ living conditions and the rental market. These spatial units are further combined into nine rental space types, each with its specific living environment, price positioning, and target tenant groups. These combinations of spatial units and rental types not only reflect the diversity and complexity within urban villages but also reveal the flexibility and inclusiveness of urban villages in adapting to urban development and market demand.

4.4. Tenants’ Needs Analysis

We distributed a total of 250 questionnaires. After screening and removing invalid questionnaires, a total of 243 valid questionnaire samples were obtained, which were analyzed using the tenants’ needs assessment method of the Kano model. According to the arithmetic results of Equations (1) and (2), we can determine the type of each need and its Better-Worse coefficient statistic of the Kano model about the leasing space of urban villages of Shibalidian Township and Cuiguozhuang Township. The results are as follows: (

Table 10. Better-Worse coefficients of Kano Model for leasing space in Shibalidian Township.

No.	Kano Requirements Attributes	Better Factor	Worse Factor
u3-2	M	0.51	−0.51
u3-3	M	0.43	−0.48
u3-5	M	0.43	−0.45
u4-2	M	0.41	−0.45
u1-1	O	0.62	−0.65
u2-4	O	0.60	−0.64
u2-3	O	0.59	−0.67
u2-5	O	0.57	−0.64
u2-1	O	0.55	−0.68
u2-2	O	0.55	−0.61
u2-8	O	0.53	−0.66
u3-1	O	0.50	−0.57
u2-7	O	0.50	−0.63
u5-4	A	0.49	−0.48
u5-3	A	0.47	−0.45
u5-2	A	0.40	−0.37
u2-6	I	0.49	−0.49
u1-4	I	0.45	−0.48
u3-4	I	0.44	−0.48
u3-6	I	0.40	−0.41
u4-1	I	0.39	−0.37
u4-4	I	0.37	−0.35
u4-3	I	0.36	−0.35
u1-6	I	0.33	−0.35
u4-5	I	0.32	−0.35
u1-5	I	0.32	−0.38
u5-1	I	0.29	−0.36
u4-6	I	0.27	−0.32
u5-5	I	0.09	−0.12
u1-3	R	0.14	−0.02
u1-2	R	0.07	−0.03

and

Table 11. Better-Worse coefficients of Kano model for rental space in Cuigezhuang Township.

No.	Kano Requirements Attributes	Better Factor	Worse Factor
u2-5	M	0.49	−0.68
u2-7	M	0.45	−0.61
u2-4	M	0.44	−0.63
u2-1	M	0.43	−0.61
u2-3	M	0.43	−0.64
u2-2	M	0.39	−0.64
u1-4	O	0.69	−0.36
u2-6	O	0.52	−0.48
u2-8	O	0.49	−0.59
u1-5	A	0.75	−0.36
u1-1	A	0.73	−0.34
u3-5	A	0.64	−0.36
u5-3	A	0.60	−0.35
u3-3	A	0.59	−0.38
u4-2	A	0.58	−0.35
u4-1	I	0.61	−0.31
u4-3	I	0.58	−0.33
u5-2	I	0.56	−0.30
u3-4	I	0.56	−0.43
u1-6	I	0.55	−0.38
u3-2	I	0.54	−0.45
u5-4	I	0.54	−0.34
u4-4	I	0.53	−0.36
u3-6	I	0.51	−0.38
u5-1	I	0.47	−0.28
u4-5	I	0.46	−0.33
u4-6	I	0.45	−0.32
u5-5	I	0.08	−0.02
u1-3	R	0.11	−0.09
u1-2	R	0.11	−0.06

):

4.4.1. Kano Model Demand Types and Satisfaction Analysis for Shibalidian Township

Based on the statistical results of the data based on the Better-Worse coefficient, a scatter plot of the Better-Worse coefficient matrix was established to classify and prioritize the quadrant positions of the 31 demand indicators, as shown in Figure 14. Therefore, the priority of each demand indicator can be seen through the Better-Worse coefficient value.

Tenants’ needs for leasing space in urban villages are classified into five categories: expectation-based, glamour-based, undifferentiated, essential, and reverse. Expectation-based needs (e.g., u_1-1 rental space, u_2-4 thermal performance, u_2-8 sound insulation performance, u_3-1 quality of anti-noise materials) have high importance and urgency and need to be satisfied as a priority. Attractive-type needs (e.g., u_5-4 shared vehicle points, u_5-3 bus stops, u_5-2 bicycle parking areas) are important but not urgent. Non-differentiated needs (13 indicators) are of less concern to users. Essential needs (e.g., u_3-2 kitchen and bathroom facilities, u_3-5 security monitoring, u_4-2 shelter from the wind and rain) are not urgent but necessary and constitute the basic requirements for leasing space. Reverse-type requirements (e.g., u_1-3 floor area ratio, u_1-2 number of scale households) reflect users’ dissatisfaction with high-density housing and require policy intervention. Improvement of rental space in Beijing’s urban villages should be prioritized according to the type of demand to ensure scientific and reasonable living conditions and enhance tenant satisfaction.

4.4.2. Kano Model Demand Types and Satisfaction Analysis in Cuigezhuang Township

Similarly, based on the type of each demand and its Better-Worse coefficient statistics of the Kano model of the rental space in the urban village of Cuiguozhuang Township, a scatter plot of the Better-Worse index coefficient matrix is established, as shown in Figure 15.

The 31 rental space demand indicators were categorized and prioritized using the Better-Worse coefficient matrix scatterplot. Desired needs (e.g., u_1-4 house layout, u_2-6 lighting facilities, u_2-8 acoustic performance, and u_3-1 anti-noise materials) have high Better and low Worse coefficients, which are labeled as important and urgent, and need to be met as a priority. Attractive needs (e.g., u_1-5 public space, u_1-1 rental area, u_3-5 surveillance facilities, u_3-3 kitchen and bathroom facilities, u_4-2 shelter from the wind and rain, and u_5-3 transportation stops) are not urgent but have a significant effect on user satisfaction. Undifferentiated needs (e.g., u_1-6 accessibility, u_3-2 lighting for kitchen and bathroom, u_3-4 decoration safety, u_3-6 fire protection facilities, u_4-1-u_4-6 outdoor facilities, u_5-1 pavement width, u_5-2 bicycle parking, u_5-4 shared vehicle points, u_5-5 number of car parking spaces) are of low concern to users. Essential requirements (e.g., u_2-1 ventilation performance to u_2-7 soundproofing performance) are basic requirements, not considered important but urgent. Reverse-type demands (e.g., u_1-3 floor area ratio, u_1-2 number of scale households) reflect dissatisfaction with high-density housing and require policy attention. Rental space in Choi Kok Tsui Township needs to be improved in terms of building performance and materials, with tenants paying particular attention to internal quality.

4.4.3. Analysis of Tenants’ Needs and Building Type Matching for Rental Spaces in Urban Villages

The diversity of rental spaces in Beijing’s urban villages reflects the response to tenants’ needs in the Kano model evaluation system (

Table 12. Matching user demand types for different rental spaces.

Type of Rental Space	Types of Quality Prioritized	Level 1 Demand Indicators	Tier 2 Demand Indicators
Independent use–attached Independent use–separate	One-dimensional Quality (O) Must-be Quality (M)	Basic facilities for rental space (U1)	(u1-1) Area of rental space (u1-2) Size of rental housing (number of households) (u1-3) Floor area ratio of the house (density level) (u1-4) Layout rationality of the house
		Building performance of rental space (U2)	(u2-1) Ventilation performance of the house (u2-2) Closed doors and windows of the house (u2-3) Winter protection of the house (u2-4) Summer thermal performance of house (u2-5) Lighting performance of the house
		Quality of equipment in rental space (U3)	(u3-1) Quality of noise protection materials (u3-3) Quality of kitchen and bathroom electrical equipment
Independent use–fuzzy Shared use–attached Shared use–separated Shared use–fuzzy Mixed use–attached	Must-be Quality (M)	Building performance of rental space (U2)	(u2-1) Ventilation performance of the house (u2-2) Closed doors and windows of the house (u2-3) Winter protection of the house (u2-4) Summer thermal performance of house (u2-5) Lighting performance of the house
Mixed use–separated Mixed use–fuzzy	Must-be Quality (M) One-dimensional Quality (O)	Building performance of rental space (U2)	(u2-1) Ventilation performance of the house (u2-2) Closed doors and windows of the house (u2-3) Winter protection of the house (u2-4) Summer thermal performance of house (u2-5) Lighting performance of the house
		Quality of equipment in rental space (U3)	(u3-1 Quality of noise protection materials (u3-3) Quality of kitchen and bathroom electrical equipment

). Independent-use rental spaces, including attached and detached types, tend to satisfy tenants’ One-dimensional Quality (O) and Must-be Quality (M), although the latter may have building quality issues. Fuzzy-use rental spaces, on the other hand, focus primarily on Must-be Quality (M), and tenants have lower expectations of their living conditions.

Shared-use rental spaces, both attached and detached, prioritize Must-be Quality (M) and may lack separate kitchen and bathroom facilities. Separate types also focus on Attractive Quality (A) to enhance the quality of shared amenities. Fuzzy types, on the other hand, may consider Indifferent Quality (I) in addition to Must-be Quality (M) due to lower tenant concerns about the living experience.

Mixed-use rental spaces need to balance Must-be Quality (M) with One-dimensional Quality (O), providing a compromise between separate and shared characteristics. Separate-use rental spaces focus on Must-be Quality (M) while possibly pursuing One-dimensional Quality (O). Ambiguous rental spaces focus on the Must-be Quality (M) and may pursue the Attractive Quality (A) to enhance the living experience.

Overall, urban village leasing spaces are prioritized to satisfy the Must-be Quality (M) to ensure basic living needs. Depending on the characteristics of the space and the expectations of the tenants, they may also satisfy One-dimensional Quality (O) and Attractive Quality (A), reflecting the dynamic balance between the market, the landlord, and the tenants’ needs.

4.4.4. The Relationship Between Rental Space Quality and Demand Fulfilment

The quality of a rental space can be defined as its ability to fulfill the needs of its tenants. According to the Kano model’s five categories of needs, high-quality space not only meets ‘Must-be Quality’ space types, such as providing basic living functions (e.g., kitchens, bathrooms), but also meets basic needs that have a direct impact on tenants’ quality of life and satisfaction. A certain degree of One-dimensional Quality (e.g., ventilation, lighting) and Attractive Quality (e.g., convenient transport facilities) can further enhance the quality of the space. These factors enhance the tenant’s living experience, thereby increasing overall satisfaction. Low-quality spaces may only fulfill essential attributes, or even some of the essential attributes (

Table 13. The relationship between rental space quality and demand fulfilment.

Typology	Quality	Prioritizing Needs	Characterization
Independent use–separate	High	Must-be, One-dimensional	Separate kitchen and bathroom for good privacy and living conditions.
Independent use–attached	Relatively High	Must-be, One-dimensional	Connected to the ‘landlord’s space’, a little less independent, but well equipped.
Independent use–fuzzy	Medium	Partial Must-be, One-dimensional	The structure is complex, with some facilities separate and some shared.
Mixed use–separated	Medium	Partial Must-be, One-dimensional	Some of the facilities are shared and the living space is compact.
Shared use–separated	Medium	Partial Must-be, One-dimensional	Share some of the facilities but maintain a degree of independence.
Mixed use–attached	Relatively Low	Partial Must-be, One-dimensional	Shared facilities, high space utilization but low density and comfort.
Mixed use–fuzzy	Relatively Low	Partial Must-be, One-dimensional	Facilities and spaces are heavily shared and the quality of the environment is poor.
Shared use–attached	Relatively Low	Partial Must-be	Connected to a ‘landlord space’ with shared facilities.
Shared use–fuzzy	Low	Partial Must-be	There is a high degree of sharing of facilities and space and a lack of privacy.

). High-quality rental space meets the basic needs of the tenant (Essential Attributes) and provides features that exceed expectations (One-dimensional Quality and Attractive Quality), thus enhancing the overall living experience. Low-quality spaces tend to sacrifice the metrics that tenants care less about in the first place, namely, Indifferent Quality. These attributes, even if improved, have limited impact on tenant satisfaction, so with limited resources, landlords may choose to sacrifice these attributes to reduce costs.

The market positioning of a rental space has a direct impact on its quality. With limited resources, space design and resource allocation will prioritize the basic and core needs of tenants. For low-income tenants, the type of space needs to provide as much basic livelihood security as possible under limited conditions. For example, in the further redevelopment of urban villages, landlords tend to sacrifice the ‘One-dimensional Quality’ of some rental spaces for basic living functions (e.g., kitchens and bathrooms) in order to attract and retain tenants, thereby increasing rents and market competitiveness. As a result, spaces targeting low-income tenants may only meet ‘Must-be Quality’ in order to reduce costs and rents and attract price-sensitive tenants. Different building types accommodate market diversification by catering to different levels of demand. This is demonstrated by the fact that high-quality space attracts higher-income tenants, while low-quality space serves price-sensitive tenants who do not require high-quality space.

High-quality rental space helps to increase the attractiveness of the city and promotes social harmony, while low-quality space, despite some problems, such as overcrowding and environmental degradation, is providing affordable housing for low-income groups in the city and also helps to increase the carrying capacity and inclusiveness of the city.

The quality of rental space is closely related to the quantity and quality of the demand indicators it meets. High-quality spaces can provide additional One-dimensional Quality and Attractive Quality beyond the basic needs of tenants, while low-quality spaces may first sacrifice the undifferentiated quality that tenants care less about. Low-quality spaces may first sacrifice undifferentiated attributes that are of less interest to tenants in order to reduce costs. This logic is well represented in the Kano model and has been validated in the real rental market.

5. Discussion

5.1. Informal Settlements: Contributions and Challenges of Urban Villages

Informal settlements, including urban villages, develop without formal state control and are integral to urban contexts, providing economic housing for low-income and migrant workers while alleviating urban housing pressures [11,41,42]. However, they face challenges such as inadequate infrastructure and poor living conditions, necessitating policy intervention [43,44]. Radical urban village renovation strategies often prioritize rapid improvement at the expense of disadvantaged groups, leading to forced relocation and disrupted community ties [1]. In contrast, inclusive and incremental renovation strategies focus on small-scale, gradual improvements to protect residents’ rights and achieve sustainable development while maintaining social networks and cultural characteristics [9,42]. Balancing interests to ensure low-income groups’ housing rights is crucial for inclusive renovation. Informal settlements offer valuable lessons in incrementality, sustainability, and self-reliance, contributing to community resilience and making them predominant neighborhoods of the twenty-first century [45]. Government-led, market-oriented operations change the urban landscape, but they are costly, ignore the rights of the original residents, and exacerbate social inequality. Although Beijing’s urban villages are self-renewing, the overall trend is towards demolition and relocation, leading to a flow of tenants to other urban villages and exacerbating the densification of rental space. The government lacks safeguards for the foreign population when compensating and resettling villagers.

5.2. Mainstream Informal Settlement Renewal Methods

In China, urban villages in Shenzhen have undergone large-scale demolition and reconstruction led by the state, improving infrastructure but displacing low-income residents [42]. In contrast, Guangzhou emphasizes community participation and adaptive reuse, preserving social networks and providing affordable housing [34]. Both approaches offer valuable lessons for Beijing’s inclusive renovation strategies. Internationally, Brazil’s “Favela-Bairro” project in Rio de Janeiro focused on incremental improvements and community participation to enhance living conditions without disrupting social networks [46]. Similarly, India’s “JNNURM” program prioritized stakeholder collaboration to upgrade slums [41]. These examples highlight the importance of context-specific, community-driven approaches.

Beijing’s current redevelopment strategy involves wholesale demolition of villages and formalizing communities by converting villagers’ household registration from “rural” to “urban” [42]. This strategy, driven by land sale revenues and the desire for more governable spaces, has been criticized for its impact on low-income residents and social cohesion [34]. It often results in the loss of land-use rights for indigenous villagers and reduced access to affordable housing for migrants [47,48]. This mode of redevelopment, aimed at higher-income groups, lowers the supply of low-cost rental housing and leads to gentrification [48,49]. In this context, Maquanying village presents an alternative approach that avoids these pitfalls. Its transformation has provided new opportunities for the indigenous villagers, and the redeveloped spatial framework, where housing can be expanded as needs grow, has delivered high-standard conditions regarding housing and public space, accommodated new migrants, and maintained an urban environment conducive to social life [11].This kind of progressive spatial regeneration initiated by community residents is clearly more inclusive and sustainable (Figure 16).

5.3. Inclusive Renovation Strategies

Inclusive renovation focuses on protecting the housing rights of vulnerable groups and improving quality of life through gradual, organic renovation. This approach avoids sharp rent increases by incrementally improving self-built housing and increasing rental supply [50,51]. It balances economic efficiency, social equity, and environmental sustainability [52]. In Beijing’s urban villages, inclusive renovation strategies involve vertical and horizontal replication of “homeowner’s space” and “leasing space” prototypes, as well as internal division. This approach adapts to market demands, meets diverse tenant needs, and increases space utilization efficiency. Basic spatial units are combined to form diverse rental types, enhancing housing supply and community cohesion through mixed-use development and participatory planning [46]. Successful examples highlight the importance of multi-party cooperation for equitable and sustainable urban development [53,54].

5.4. Economically Driven and Incremental Renovation

Incremental renovation is an effective approach for transforming urban villages, improving living conditions and maintaining community vitality through small-scale, phased updates that preserve cultural and social structures [3,20]. This model balances development with conservation, adapting to residents’ needs through a combination of spontaneous construction by villagers and government control [42,44]. Economic factors, particularly rental yields and market demand, drive the direction and speed of renovation [15,19]. Landlords, aiming for economic benefits, often prioritize increasing the number of rental spaces over improving quality. To meet tenant needs while controlling costs, landlords focus on Must-be Quality (M) and One-dimensional Quality (O), sometimes sacrificing less critical aspects. This strategy attracts low-income tenants but may compromise long-term sustainability. The equilibrium between landlords and tenants reflects market dynamics, with landlords meeting core needs while tenants accept limited-quality spaces within budget constraints. This balance highlights the interplay of financial incentives and lifestyle needs.

6. Conclusions

6.1. Exploring Inclusive Socio-Spatial Transformation and Incremental Renovation from the Perspective of Vulnerable Groups

The research findings underscore the necessity of prioritizing the interests of vulnerable groups, such as tenants, in urban renewal initiatives. The transformation of urban villages should be approached from the perspective of vulnerable groups, focusing on the needs of low-income earners and migrant workers. Such groups have urgent demands for affordable and safe housing and basic living conditions. Renovation strategies must ensure that they are not excluded from urban renovation and that their basic right to housing is safeguarded so that they do not lose their homes or face a higher rent burden as a result of renovation.

Urban renewal programs are not only about improving the physical environment but should also be a process of social inclusion, taking into account different income groups and providing diversified rental spaces to meet diverse needs. At the same time, the rights and interests of tenants should be safeguarded to ensure the legality of contracts and the stability of tenancy relationships. If tenants are unable to afford housing after renovation, it will lead to an increase in the cost of labor for enterprises and trigger an exodus of manufacturing industry, an issue that needs to be carefully considered in policy formulation.

6.2. Diversity in Rental Space Reflects Inclusiveness

The incremental renovation of Beijing’s urban villages has facilitated the diversification of rental space types to suit different tenant needs. These spaces form different price tiers based on the living functions and experience offered (e.g., size, ventilation, lighting, soundproofing, kitchen and bathroom facilities). Individual-use rental spaces offer complete living functions and a good living experience, fulfilling One-dimensional Quality (O), as well as Must-be Quality (M), and are usually priced higher to attract tenants who seek a high quality of life. Shared-use rental spaces are less expensive, may lack separate kitchens and bathrooms, and need to share common spaces, but meet basic living needs and attract rent-sensitive tenants. Mixed-use rental space seeks to strike a balance between separate and shared facilities and is suitable for tenants with specific living requirements but limited budgets.

This diversity reflects market adaptability and inclusiveness, serving tenants with different incomes and needs. It attracts a broad tenant base, keeps landlords competitive, and promotes social harmony and stability. Incremental renovation, as an inclusive socio-spatial transformation, addresses urbanization issues, fosters urban village development, and enhances residents’ quality of life. It also promotes rational resource allocation, reduces social costs and environmental impacts, and supports an inclusive society.

6.3. Resident-Driven Incremental Micro-Renovation as a Complement to Urban Renewal

It is preferable to explore incremental resident-driven micro-renewal as a viable approach to improving informal settlements, rather than just outlawing these behaviors as illegitimate. The regeneration of informal settlements such as urban villages cannot rely solely on government-led or corporate redevelopment projects, as such elitist regeneration often implies high costs and neglect of low-income tenants. The role of the government should focus on establishing an effective regulatory framework and providing appropriate policies to prevent chaos and confusion in the spontaneous micro-renewal of urban villages.

Encouraging spontaneous renovation and targeted rental space development in urban villages is crucial to meet the diverse needs of different income groups. This is particularly important because government-led and corporate-driven urban renewal and housing development projects, including subsidized housing initiatives, often overlook the needs of non-urban registered tenants in urban villages. The spontaneous construction activities in these areas effectively fill this gap by providing affordable housing options for these vulnerable groups, thereby ensuring a balanced and inclusive rental market.

6.4. Policy Recommendations

To achieve sustainable and equitable urban development, regulatory frameworks must be implemented to balance the interests of landlords and tenants. These frameworks should prioritize the Must-be Quality (M) and One-dimensional Quality (O) attributes identified in the Kano model, ensuring that renovations maintain affordability while improving essential living conditions. The government should focus on creating an effective regulatory system to prevent uncontrolled and chaotic development in spontaneous micro-renovations.

Incremental renovation incentives should be provided to landlords. These incentives, such as tax breaks or subsidies, will encourage landlords to undertake phased renovations that improve living conditions without displacing current residents. This approach aligns with the principles of inclusive and incremental urban development, allowing residents to benefit from improved living conditions while preserving the community’s unique character. A robust policy monitoring and evaluation mechanism should be established to assess the social impact of renovation projects. The evaluation mechanism should collect feedback from multiple stakeholders, including tenants and landlords. This mechanism will ensure that projects comply with inclusivity principles and prevent landlords from excessively subdividing rental spaces for profit, which could deteriorate tenants’ living conditions. Policies should balance the interests of landlords and the living environment of tenants.

In summary, the policy recommendations derived from this study emphasize the importance of protecting the interests of vulnerable groups through targeted rental space development, effective regulatory frameworks, community participatory planning, and incremental renovation incentives. The government’s role in establishing a balanced regulatory environment and providing support for inclusive renovation is essential for achieving sustainable and equitable urban development.