President Jiang Zemin has chosen a retirement home in an upscale Shanghai neighbourhood close to where the first Communist Party congress took place, sources said.
Mr Jiang's protege, former Shanghai party secretary Huang Ju, is said to have selected the site for him. The construction of Mr Jiang's new home has become known among local authorities as the 'No 1 project'.
The exact location of Mr Jiang's home is being kept secret, but it is understood to be in the Luwan district, close to the luxury shopping and entertainment area of Xintiandi.
The area, known for its trendy restaurants, high-fashion stores and art galleries, was developed by Hong Kong tycoon Vincent Lo Hong-sui. It contains some of Shanghai's most luxurious apartments and houses, with prices running as high as US$1 million (HK$7.79 million).
A spokesman for the Shanghai municipal government declined to comment on the possibility of Mr Jiang moving to town.
Sources said the location of Mr Jiang's new home, close to the site of the first congress of the Chinese Communist Party in 1921, was symbolic and could be intended to reinforce his legacy.