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Check out my MegaBylon map with 1.1Million inhabitants. Only four neighborhoods: Two Middle, One Upper, and only One Lower that has over 5500 House for over 800k pop. In a SINGLE neighborhood.
Using this feature properly you can just grow neighborhoods to ANY size. It's quite powerful and saves a lot of space.
Also, good job on this guide, almost makes me want to improve upon it and provide all the other optimization tricks I found along the way :)
Have you placed beautifications next to villas? Grass, flowers, decorative roads? You have to raise the appeal level.