Islam says no new churches--why?
On dhimmi/millet neighborhoods:
Churches, synagogues, and other non-Muslim places of worship were restricted to locations outside the central public areas of the city. Usually they were located in the residential quarters where those who frequented them lived. […] In principle, non-Muslim communities remained constant, while only the community of Muslims was free to grow by way of proselytism. New mosques could therefore be built as needed, but non-Muslim places of worship could for the most part be only repaired or replaced.
The Spirit of Islamic Law by Bernard G. Weiss, p 149.