After this summer, 24-year-old Isco will only have one year left on his current contract and is believed to have decided to move away from Bernabeu due to his unsettled position in Zinedine Zidane’s squad.
The Spaniard almost signed for City in 2013 but instead left Malaga for Real Madrid after Zidane managed to persuade him.
Meanwhile, Guardiola is planning to make changes at the end of this season and is desperate to bring in fresh blood at City. Isco would be a sure-shot long-term replacement for David Silva, who is although more versatile.
Manchester City boss yesterday admitted that he is already planning for the future – and looking to sign more young stars like Gabriel Jesus, Leroy Sane and Raheem Sterling.
He explained: “I am planning. Txiki Begiristain is planning. We have to have one eye on the short, the medium, the long term.
“We are buying for the long term. That’s why Leroy is here, why Raz is here and why Gabriel is here. All of them are 20 years old, except one or two cases when we need experience. The age is so important.
“Maybe we are going to buy a guy who is 28 or 29 years old because we are short in that position and he is going to give three or four important years. But of course, as young as possible is much better. That planning is underway.”