The Institute for Urban Strategies on Wednesday released its first edition of the ranking, which covered 72 cities excluding Tokyo.
The cities were rated using a total of 83 indicators across six categories — economy and business, transport and accessibility, environment, life and residence, culture and interchange, and research and development — based on statistical results and hearings with local residents.
Kyoto was highly rated for its universities and abundant tourism properties, including historical and cultural assets, the think tank said.
Fukuoka came in second on the back of its powerful economy. A number of special deregulation zones are located in the southwestern hub.
Despite scoring poorly when it came to crime, Osaka ranked third thanks to robust private consumption and investment, and its convenient transportation network.
Nagoya came fourth, with many companies in the city having high global market shares, while Yokohama ranked fifth.
At No.6 was Kobe, which is making strenuous efforts to lure tourists, followed by Sapporo, which has many tourist spots and tourism-related facilities.
Sendai came in eighth thanks to strong marks for its universities in the area of research.
All of the top eight cities are prefectural capitals.
Outside of regional capitals, Tsukuba, Ibaraki Prefecture, ranked ninth on the back of its many research facilities, mainly in the field of science and technology.
Separately, the Institute for Urban Strategies rated Tokyo’s 23 special wards. Topping the list was Chiyoda Ward, which hosts the major business districts of Otemachi and Marunouchi.
“We hope the ranking will help cities understand their strengths and weaknesses, and enhance their good points,” an official of the institute said.