I mean, eminent domain exists for this reason, but generally, compensation for stolen property is the norm because of the difficulty of dealing with inheritances and the like several steps removed from the original crime.

Recognizing the validity of residency is not the same as recognizing privilege. "You can stay under the same criteria as anyone else, because we aren't here to engage in ethnic cleansing" and "Your property is sacrosanct and cannot be touched under any circumstances" are two different concepts, after all.