The midfielder has fallen down the pecking order since the club re-hired Zinedine Zidane as manager and is now ready to leave Los Blancos in order to secure regular playing time.
According to Sport Witness, Manchester City are keeping close tabs on Isco's situation and are preparing to move in for the player.
The Premier League giants spent much of the summer transfer window improving their defence but were unable to sign an adequate replacement for David Silva, who departed the club at the end of last season.
Manchester City and Pep Guardiola believe that Phil Foden is the long-term successor to Silva but are also aware that they need another top-quality attacking midfielder if they want to challenge for titles.
Isco has been one of Real Madrid's star players since joining the club from Malaga in 2013. However, he has been unable to nail down a starting berth under Zinedine Zidane and is ready to move on to new pastures.
The 28-year-old will be having one eye on Luis Enrique's Spain squad for this summer's European Championships. He has been a terrific servant for his national side over the years but cannot be guaranteed a place in the squad unless he plays regular football at a high level.
Manchester City could face competition from Sevilla for Real Madrid star Isco
Mundo Deportivo believes that Isco wants to move to Sevilla, where he will get enough first-team action.
A move to Sevilla would make sense for Isco as he would be competing for a starting spot with Ilkay Gundogan and Phil Foden at Manchester City, both of whom are in good form.
Isco has also been linked with a move to Arsenal, Everton, Napoli and Juventus in recent months.
Manchester City are unlikely to spend big in January but reports suggest that Isco could be available for as little at £20 million. Pep Guardiola could also be tempted to sign Isco as he could form a formidable midfield partnership with Kevin De Bruyne.Published 07 Jan 2021, 12:37 IST