Scotsman believes Citizens have the potential to challenge for honours and admits Roberto Mancini's side have a good chance of qualifying for the Champions League
Manchester United manager Sir Alex Ferguson has the belief that it will not be long before their local rivals Manchester City will be challenging for trophies every season.
The two sides from the North West face each other in Saturday's highly anticipated FA Cup semi-final clash at Wembley, with City looking for their first piece of silverware in 35 years.
Roberto Mancini's side have all but accepted that the league title is out of reach and the FA Cup is their only possible chance of breaking over three decades of hurt.
However, with an excess of over £100 million spent on players and the prospect of Champions League football next season, Sir Alex believes the Citizens have the potential to achieve big things on the big stage.
"It's obvious with the money they've invested they have got big plans," Ferguson told reporters.
"There's no question about that. There's nothing wrong with that. You try and do the best with what you've got.
"They have a strong squad and their position at the moment is fair.
"This is where they wanted to be, in the Champions League next season and they have a good chance of that."
Sir Alex is sure that Arsenal, Chelsea and his own team will claim the top three positions and believes that the much coveted fourth place will come down between City and Harry Redknapp's ambitious Tottenham side.
He added: "It's between five of them, with Tottenham probably in the same position. It's between those two.
"You would expect Chelsea, Arsenal and ourselves to be in there. So no doubt there's been a definite improvement there."