The “no-build zone” near Sepermeru appears to be irregular-shaped. I’m not entirely sure if it’s proximity to buildings or just a free-handed zone vaguely around the city that determines it, but I built a city between the cliffs just north and west of the player cursor on the OP map. The blue lines on this map show approximately the outer walls of my city:
(You can see my city as seen from the top of the northern cliffs HERE.)