"foreign settlement" is correct and usable in written English.
You can use it to refer to an area where people from a different country have settled. For example, "The small town of Salinas was founded by a foreign settlement of German immigrants."
A foreign settlement was established at Changsha, and British and Japanese firms built warehouses.
A foreign settlement had developed around Apia Harbour by the 1850s.
A foreign settlement grew up on Gulang Island, in the harbour.
Wenzhou's port was again opened to foreign trade as a treaty port in 1876, and for a while there was a considerable tea trade; however, the port never played a large part in China's foreign trade, and there was no foreign settlement.
After Commodore Matthew Perry opened up shogun Japan with gunboat diplomacy in 1853, the sleepy fishing village of Yokohama became a foreign settlement, epitomizing the determination of Emperor Meiji, a Japanese version of Peter the Great, to import and emulate Western ideas.
I need scarcely observe that any foreign Settlement in California would for some time to come be nominally dependent on the Mexican Republic; but this state of things would not last forever, nor, while it did last, would it, I imagine, be attended with serious inconvenience.
Of all foreign settlements in Africa, that of the Arabs has made the greatest impact.
As the Ottomans extended the central government's new military, municipal, judicial, and educational systems to Palestine, the country also witnessed a marked increase in foreign settlements and colonies—French, Russian, and German.
The Japanese demands in Shanghai will, if complied with, practically amount to acknowledgment of the principle that the Japanese have the right to take over all sovereign power within the foreign settlements to an extent greater than was granted to the Chinese government.
As foreign settlements in the tropics evolved into plantation colonies, their populations grew more by importation than by birth, and model speakers for the newcomers consisted more and more of "seasoned" slaves that is, nonnative speakers who had arrived earlier and acclimated to the region and therefore spoke some approximations of the local colonial varieties of relevant European languages.
The institutional aspect had recently been much studied, however, and precedents in Chinese history had been found, for example, of treaty ports with foreign settlements, consular jurisdiction, and employment of Westerners as imperial personnel; thus, the Chinese regarded the Western impact as an extension of their tradition rather than a totally new situation that necessitated a new adjustment.
