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Skies of Arcadia Legends on Gamecube have a city/island you can upgrade. I know it's an older game but it's one of the best J-RPG still in most top 10 of any older rpg lovers.
Baten Kaitos Origins : Also a Gamecube game, you can't really upgrade the town as much but it's still pretty to look at and see it grow, plus it's made out of clay. Also, the combat system in Origins is far more action based compared to the first game (which you don't have to play first since the second game is a prequel).
and as TheRealRws said, pathfinder kingmaker
Just curious, why you search games using tags?? You use them to search on Steam.
I think you have 10000% more chances to find something on Google using normal questions instead of using tags on steam search, like ppls do this for real??
I havent seen that one, oddly enough but seems interesting, and also if you wanna a kingdom management game kind of, but cities to defend with hack n slash platform combat encounters theres the old Act raiser thats part of a series, i think it has a remake on steam, you could take a look at it. People are liking that alot of remakes being made of old games, so theyre not forgotten in the slightest lol.
heres the actraiser game link
https://store.steampowered.com/app/1393370/Actraiser_Renaissance/
That game was on super nintendo once and the graphics differ and stuff though im used to the snes graphics