The Premier League champions have slapped a £3 million asking price on Sinclair, who has made just four appearances this season for a total of 29 minutes, but Villa are not willing to go above half that fee.
Manager Paul Lambert told the Birmingham Mail last week: “There’s nothing going on with that at the moment – from both ends.
“We can’t do what Man City are asking us to do at this minute. If it became feasible financially then who knows but there’s a bit of them asking too much at the moment.”
Grealish, meanwhile, has been hailed as one of the Premier League’s most exciting prospects since making his first-team breakthrough at the start of the season, but his first-team minutes have been limited in recent months.
The Mirror reported Forest’s initial interest in the winger back in October but, with Villa needing bodies at the time to fill out their thin squad, a deal never materialised.
However, with Spanish midfielder Carles Gil arriving from Valencia last week, the club now appear more willing to offer him a short-term stint in the Championship.
“The only ones I would look at would be the younger kids, where we need to get them playing again,” Lambert told Sky Sports ahead of last weekend’s Liverpool game.
“But, regarding the more experienced ones – the lads who are in the first-team squad, no.”
Grealish, 19, has failed to make the bench for the best two Premier League matches, and the likes of Brentford, Ipswich Town and Wolverhampton Wanderers are also reported to be keen on his signature along with Forest, according to the Daily Mail.
Most Villa fans would argue that the emerging teenager should have been given more opportunities so far this season but, with Lambert handling his development with care, a second-tier loan would look like the best option for all parties.
Nevertheless, it looks like that scenario won’t unfold unless the club can bring in another attacker over the coming weeks, whether it be Sinclair or a still-to-materialise target.