The France international has seen the pot of creative talent topped up this summer, with Brazilian playmaker Fernandinho and Spanish winger Jesus Navas having been drafted in on big-money deals.
Nasri told City's official website during a Twitter question and answer session: "Of course I'm up to the challenge and the competition will just make us better.
"When you are a player, you have ambition and you play for this kind of competition. Of course I am ready to challenge. If not, I will be in my neighbourhood playing with my friends."