This paper investigates the development trajectory and spatial governance practices in the Grand Duchy of Luxembourg, a small but affluent, rapidly developing member state of the European Union. Against the background of globalisation and its urban impact (particularly concerning smaller or emerging metropolitan areas), the paper aims at reconstructing the Luxembourgian urban development trajectory, which is characterised by continuous population growth and successful attraction of global services and financial industries in a rather unique context of the niche sovereignty politics of the small state/small city. The paper also presents a carefully balanced critique of governance practices that seeks to implement integrative strategies in a rather fragmented setting of development, policy and regulation. In so doing, the paper situates this specific case of urbanisation in the context of current paths and narratives of development, particularly with respect to the emergence of global ‘enclave spaces’ and the way these are becoming nested into broader network constellations. The paper also discusses possible consequences for both governance practices and comparative urban studies.