City came fifth in the league and reached the MTN8 final last term with the likes of Thami Mkhize, Thabo Nodada, Ayanda Patosi and Lehlohonolo Majoro in their ranks.
The Citizens have since signed Siphelele Mthembu, Keanu Cupido, Kouassi Kouadja, Peter Leeuwenburgh, Gift Links and Riyaad Norodien.
Larsen, who operates off a modest budget at Abafana Bes'thende, expects a tough assignment when his side takes on Benni McCarthy's men at Cape Town Stadium in the league on Saturday.
Arrows lost 2-0 to Mamelodi Sundowns in their previous outing in the MTN8, but can draw some encouragement for the upcoming game from earning four points against City in 2017/18.
The hosts enter the match fresh off a 1-0 win over Maritzburg United in their respective MTN8 opener.
"There's a lot of quality in that team and it is a team that must be respected in the premier league," Larsen tells KickOff.com.
"Even back when Eric Tinkler was there [in 2016/17] they had assembled a very good squad from Mpumalanga Black Aces. I'm very impressed with them, they've got a quality team.
"You look at the defence; Thami Mkhize, Edmilson Dove, Taariq Fielies. And in the midfield; Roland Putsche, Thabo Nodada, Bradley Ralani and Teko Modise. And now Riyaad Norodien has been added to the fray, as well as Siphelele Mthembu. So there's a lot of quality in the team.
"I think it is a team that must be respected in the league. In my opinion they're going to have a good season and that is just based on the quality of the team they've got.
"But we also want to improve from last season. We did well against them last season and we'll try and do the same. But it is a different season, it's a different approach being used. They've slightly changed the way they play. So have we, so it's going to be an interesting tussle."
He adds: "Golden Arrows also want to be competitive this season. We've got a year under the belt now as a young team and that should hold us in good stead moving forward.
"We are a lot more experienced with how we want to play and how we need to get the best out of our players. So we are looking forward to what the season brings for us."
In team news, midfielder Sandile Zuke and captain Matome Mathiane have returned to full training, on-loan defender Siyanda Zwane faces a late fitness test, while left-back Zolani Nkombelo is expected back in November after breaking a foot in pre-season.