"He lives in the rich part of town."
Translation:Han bor i den rika delen av staden.
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It's an interesting question, I'm not sure about this. Hopefully someone comes and clarifies this. I think that if it was marked as wrong is because the possessive implies a possession, and the rich part is not a possession of the city (it's a part of it). Like a brick is part of a house, not the possession of that house (the house never bought a brick). I'm not sure if I'm explaining it properly...
Anyways, I hope some native Swedish speaker can clarify it :)