The Spanish side are reportedly preparing a £5.5 million bid to rival Barcelona for his signature, and the player is flattered by the interest.
Real Madrid have joined rivals Barcelona in eyeing Liverpool midfielder Cameron Brannagan, according to the Mirror.
The midfielder is highly rated at Anfield and very much one they are hoping will develop into a first team star in future.
He has already caught the eye of La Liga champions Barcelona, with Spanish media outlet Sport claiming in April that they were keen on him.
Real Madrid coach Zinedine Zidane
However, it seems they are not the only Spanish side to be interested in a move with Real Madrid also eyeing up the youngster.
According to the Mirror, the 20-year-old caught the eye of Emilio Butragueno when the two sides met in the UEFA Youth League in November 2014, and he has had him scouted since then.
The Bernabeu side have been impressed enough by his performances enough that they are preparing a £5.5million bid plus clauses according to the report.
Manchester United's Andreas Pereira and Liverpool's Cameron Brannagan in action
The youngster is understood to be both aware and flattered by the interest of the two Spanish giants, but there is no indication as to whether he would push for an exit.
Liverpool are unlikely to want to sell their young starlet, but it seems they may face a fight to keep him on Merseyside this summer as the European giants circle.
Liverpool manager Juergen Klopp