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The Manchester United legend previously tipped Chelsea for the title at the start of the season, but explained that City's impressive displays away against the Blues and Liverpool means that Pep Guardiola's men are the team to beat in his eyes.
"In the first four of five games of the season, I was sitting there and thinking Chelsea are the team to beat." he said on the FIVE YouTube channel.
"Three or four games later and I'm thinking Man City are the team to beat. They have looked seriously impressive against the big teams.
"They dominated Chelsea away [last weekend], they dominated Liverpool in the first half [on Sunday] and should have seen the game off.
"They might be a bit disappointed with a 2-2 draw but they look the most impressive to me. They look formidable at times.
"There's no doubt they're going to dominate 99 per cent of their games but it's just about the finishing.
"When they get over that element and get that right, I think they are the team to beat.
"Manchester City have got the experience and the class and the players. They seem to be head and shoulders above everyone else tactically."
City are now beginning to hit their stride in the Premier League after a 1-0 defeat away at Tottenham Hotspur on the opening day of the season, and have shown their ruthlessness in front of goal with 5-0 wins over Norwich City and Arsenal. They also hit Leipzig for six in a 6-3 win over the German side in the Champions League.
Along with Ferdinand, Roy Keane and Jamie Carragher both see Guardiola's men as the side to beat, with Keane highlighting the Spaniard's impressive record in the biggest games.
"It's about the managers as well, Pep Guardiola's track record is mind-boggling, he knows how to win football matches,' Keane told Sky Sports following City's draw with Liverpool.
"They are a hard team to beat. Liverpool will no doubt be in the mix because they have lots of goal scorers.
"They conceded three against Brentford and two against City, so that doesn't look great, but they've got brilliant players going forward, world-class players.
"I still think both of these teams, Chelsea included, will do well to finish ahead of Man City."
Carragher added: "Man City are the team to beat. The game last week against Chelsea was a big one for me.
"It was a complete domination and it was similar for periods in that first half [v Liverpool]. For me, they are the team to beat."
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