Capital of Hungary — a number one capital! (5)
I believe the answer is:
hanoi
'capital' is the definition.
(Hanoi is an example)
'capital of hungary a number one' is the wordplay.
'capital of' suggests taking the first letters.
'number' becomes 'no' (abbreviation for 'number').
'one' becomes 'i' (Roman numeral).
The initial letter of 'hungary' is 'h'.
'h'+'a'+'no'+'i'='HANOI'
(Other definitions for hanoi that I've seen before include "Capital city of Vietnam" , "foreign city" , "Asian city" , "Vietnamese capital" , "capital out East" .)