Didn't want to go too far off topic in the guild thread so I broke off this subject here. Information for AoC FAQ and Lore is as follows:

City Building and Defense

13.1 Will players be able to build cities in Age of Conan?
Yes, there is a complete system in place for allowing guilds to build entire cities, and there will be both PvP cites (or battlekeeps as well call them) and cities found in areas where you can not PvP. Once a guild is rich and powerful enough, it will be able to purchase a piece of land and start building a settlement. The process will, of course, take anywhere from days to weeks and months, and all the members of the guild will have to work together to reach this goal. If you would like more information on PvP cities please check out the PvP and siege section of the FAQ.

13.2 Where can we build player cities?
There are designated areas in the world where you can build player cities. It is not possible to pick just any place to build a city, as this could quite possibly break not only the aesthetics of the game but also the very structure of it. These areas are open for anyone to settle in.

13.3 How many player cities can there be on one server?
When dozens of guilds each want to create a player city, there needs to be systems in place to prevent overcrowding and a system to ensure everyone gets space to build on. That's why we're using instancing for these areas. One copy of the area can, for instance, hold a certain amount of player cities, and once that number is reached the server creates another instance of that area which players can settle in. Be aware, however, that everyone can visit every player city if they want to. Using instancing technology is the only way to ensure all guilds get the opportunity to build cities in the PvE regions.

13.4 How does the process of building a city actually work?
Once your guild have purchased a piece of land you can start building right away. For most of the building work, you will need someone in the guild with the skills of the architect to construct and place the buildings within the boundary of the area you have purchased. You also need resources like iron, wood and stone to construct buildings, and all members of the guild will be able to go out into the world and collect these. The architect can then start setting up buildings.

13.5 What sort of buildings will you be able to construct?
There are many different kinds of buildings available for player cities – everything from smithies to town halls, taverns and shops. You can even build city walls to defend your settlement.

13.6 Can other players attack our city?
No, rivaling player guilds can not attack your city in the PvE regions. We came to the conclusion that it would not always be entertaining to have your city attacked by other guilds when you've spent such a long time building it up. Instead, computer-controlled enemies will be more than happy to invade your settlement. Once you start building your own player city, computer-controlled characters will start making a city not far from yours. You will see their structures appearing over the course of days and weeks, and once they've made the barracks they will start producing soldiers which they can then use to launch an attack on your player city.

13.7 How often will these computer-controlled enemies attack?
The computer-controlled enemy city will attack at specific intervals – not all the time, so you won't have to constantly be on guard. However, you would be wise in attacking them first, keeping the development of their city down, or else they will eventually grow into a powerful adversary who can attack and destroy your city using not only their men alone, but also catapults and trebuchets.

13.8 So my guild can't own anything that other players can attack?
Separate from the areas of city building, you will find the Border Kingdoms. In these lands your guild will be able to construct and maintain a battlekeep that can be attacked by rivaling guilds. It is possible to own both a battlekeep and a player-made city.

13.9 What benefits are there from owning a player city?
Besides the obvious statement it makes – a player city being perhaps one of the ultimate symbols of status and success – you will also be able to build structures that are beneficial for everyone in your guild. This is a place where your people can come together and carry out the business needed, and the facilities of a player city can come quite in handy for a traveling adventurer. You can also open shops and man them with computer-controlled vendors, and other players – even those outside your guild – will be able to visit these shops and trade there. So your city can become the ultimate hot spot for trading in the region, if that is what you want. It’s all up to you and your imagination.

13.10 Can anyone else besides guild members protect the city?
Anyone can be present in your city and fight whatever invading forces that might appear. The guild can also hire computer-controlled guards that will be able to offer a fair deal of protection.

13.11 Can other players outside the guild visit our city?
Yes, everyone can enter any city as long as there are no city walls blocking you out. If there are such walls, the gate will have to be open for non-guild members to enter.

So there may be plots near the PvP area, but ANYONE can build there and it won't be near the PvP area per say. It will be in an instance near the area with more instances created if more guilds wish to build a city there.

That means there will be advantages and disadvantages to having a city in different locations. If your city is in a low traffic area then there will be less instances and cities to visit from that access point. However if its in a high traffic area where everyone is building then your city could get lost amongst the masses. Personally if building at an access point near the PvP lands means I need to go to city 7 of 10 of instance 13 of 25 and pay an extrodinary tithe to the guild for the upkeep costs of the land, I'd rather have a city 1 of 5 in instance 1 of 2 elsewhere on the map.

Then there's the problem of high traffic means high volume means high failure. If of the 10 cities (lets say there are 10 cities per instance as an example) only 3 are well managed and the other 7 are run by small guilds poorly managed then you will have a the problem of 3 cities under constant attack by 10 NPC cities.

There will be 'some' advantage to having a city at an access point near the PvP lands, but its not as clear cut as plotting it on the boarder and leaving your walls to PvP. Its more a case of being at an access point with many other cities in an instance that will be in a designated area close to the PvP lands. We've yet to see how travel will be managed, but if rapid transport is made avalible via predetermined routes you could pay to travel quickly then such an advantage of placement is lost by the disadvantages.