reputation rather then as the city itself. Therefore while I think most historical cities are ripe for this genre, the best is likely to be written by people who either live there or know the city (present and past) really well. Having said that, it seems likely the more cities people use for urban fantasy the higher the chance of good urban fantasy about other places will happen, which will hopefully happen with the evolution of the genre.
True story: I wrote a Matthew Swift-style story for a friend's birthday about our university town/city. Now, I was a student in this city for three years. I figured I knew it pretty well.
After graduating, I lived there for another year - the usual 20-something odd-jobs-oh-God-will-someone-please-hire-me stuff. I tried to read back over that fic at the end of that year, and it was not the same city.
It's just a fact. It's the same way I just finished living in Berlin for a month, and I feel like I'm maybe qualified to write a drabble, but nothing longer. Because different things are important or matter when you live somewhere. That's one of my favourite things about the Matthew Swift series: how most of the time they steer clear of landmarks, save for a few scenes. Because that's what it's like when you actually live in these cities. When you live in a city you barely ever visit the sights. (Example: in my own town, we have a Roman hypocaust and an abbey which must be centuries old. I went to the former when I was about 7 during a field trip, the latter when I randomly decide to join in the family trip to Midnight Mass.) The sure sign that you live somewhere is that you don't make a big deal out of these things. Probably the closest I came to being a 'Berliner' was when I realised I hadn't seen a load of things because I'd been too busy working.
This is a roundabout way of saying: yes, I totally agree with everything you're saying. (Sorry, rambling's a bit of a compulsion for me.) I have no idea whether it's hapening in non-Western areas, although I genuinely hope so. These are genuinely interesting cities which have a completely different feel to them, with different traditions in magic and urban life.
So I guess the answer is that if you want to write about a city that isn't London, you've got to move?
(I wonder if my parents will believe that...)