In Shanghai, globalised urban images and a well-functioning accumulation regime are enthusiastically sought after by urban policy, and explicitly promoted as a blueprint for a civilised city life. The city is celebrating its thriving neo-liberal urbanism by implementing enormous new-build gentrification, mostly in the form of demolition–rebuild development involving direct displacement of residents and landscapes. This study aims to understand demographic changes and the socioeconomic consequences of new-build gentrification in central Shanghai. The paper first examines demographic changes between 1990 and 2000 in central Shanghai, i.e. the changing distribution of potential gentrifiers and displacees. It then looks into two cases of new-build gentrification projects in central Shanghai, to compare residents' socioeconomic profiles in old neighbourhoods and new-build areas. This study also examines the impacts of gentrification on displacees' quality of life and socioeconomic prospects. Because the enlarging middle class and the pursuit of wealth-induced growth by the municipal government are turning the central city into a hotspot of gentrification, inequalities in housing and socioeconomic prospects are being produced and intensified in the metropolitan area. This study thus emphasises that critical perspectives in gentrification research are valuable and indispensable. Copyright © 2009 John Wiley & Sons, Ltd.