Look for a good production area. The ideal is Cows on grass plus some hills. A river is a bonus for the Hoover Dam (much later in the game).
With a leader, find the best production area that can nest about five decent cities close to the Forbidden Palace city. Distance from the capital is irrelevant.
Without a leader, about 8 to 11 squares distance on a standard size map, Emperor level. Again, look for an area that can nest several production cities close to the Forbidden Palace.
Again, like almost every other question about the game, the answer will vary with map size and difficulty level.