The Chelsea boss insists that City will be looking to start the season strong as they aim to win the league, "I think it's pretty clear that they are building a squad to fight for the title," the 33-year-old said.
"It's for Mancini to say what his objectives are but my personal perspective is that they are making good signings and that they can threaten for the league."
The former Porto coach feels it be close race between a number of five clubs, including Manchester United, Arsenal, Liverpool, Chelsea and Manchester City.
"I think Man United as the title holders will be a reference for everybody but you can see the amount of activity Manchester City have had in the market. It's pretty clear they have a title objective as well," he said.
"Liverpool did more or less the same, Tottenham want to get back into the top four so they'll be challenging and Arsenal are always a threat - we haven't seen the last of them in the transfer market - so everybody is strengthening and as long as everybody feels happy with what they have, everybody competes in a different way."
Chelsea have been relatively quiet in the transfer market so far this summer, but Villas-Boas suggests he will add to squad is the right player becomes available.
"It all boils down to the evaluation period, there's still plenty of time for those decisions," added Villas-Boas.
"The players that we have shown interest in are young and looking to the future of the club, you might see similar moves in the future from us. It is one of the oldest squads in the Premier League, we respect them and we are happy enough with the quality that we have to challenge for the title but we are also looking into the future.
"We are so comfortable at the moment with what we are getting because of the young players we have. Things for the future are brighter for us in that respect."
