An analysis of the most recent national Survey of Disability, Ageing and Carers found adults over 65 living in major cities were 1.12 times more likely to develop the brain disorder.
The University of Southern Queensland study is the first to look at the geography of dementia prevalence using national data from both households and care facilities.
Environmental factors could influence the higher rates in the cities, lead author and PhD student Rezwanul Haque wrote.
"For example, earlier research identified chronic noise exposure, air pollution, and a paucity of green space as probable risk factors for cognition reduction, which are more prevalent in metropolitan areas," the study said.
A 2020 University of Wollongong study of nearly 110,000 NSW adults found increasing urban tree canopy cover could help lower the risk of dementia.
The results of the University of Southern Queensland research, published in the PLOS One science journal, defied expectations in one area of rural health, research supervisor Professor Khorshed Alam said.
"The traditional view is that people who are living in rural and remote areas should have more dementia prevalence, but this study is saying the opposite," Prof Alam told AAP.
He said the research could be used to better inform public policy and planning.
"In our traditional decision-making and urban land use planning, we don't pay enough attention to green spaces, playgrounds and urban forestry," Prof Alam said.
"We think converting them into more commercial uses has value, but maintaining forestry spaces, green space or walkways has intrinsic value."
The researchers noted that people in metropolitan areas, who generally have higher levels of education and income, may be more likely to understand the signs of dementia and have it diagnosed.
The study analysed data from 74,862 people in 2015 and 65,487 in 2018, the most recent surveys, and found the overall rate of dementia was increasing, a recognised global trend.
Prof Alam said the research also highlighted the need for better national health data to get an updated overview of disease prevalence, which would help target community health programs.
"In Australia we don't have regular studies about older people with dementia, the data frequency is not good.
"We need to (improve) data so that informed decisions can be made."
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