Arsenal defender Nacho Monreal believes that Isco has "already signed for Real Madrid".
The Malaga starlet has attracted interest from a number of clubs but it has been reported that Manchester City and Real Madrid were leading the race for the player.
With former Malaga boss Manuel Pellegrini moving to the Etihad, the player was tipped to move to the English Premier League but Monreal, who played alongside Isco at Malaga, believes that the player will join Los Blancos.
"Isco has succeeded wherever he has gone. I believe he has already signed for Real Madrid and I'm sure he'll do very well because he is a great player," the 27-year-old told Marca.
"He may cost them, but together they will have opportunities and they will seize them."
The Arsenal defender also voiced his opinion on reports suggesting that the Gunners are closing in on Gonzalo Higuain, who has confirmed that he wants to leave Madrid this summer.
"I would love it. Higuain is a part of football, and I always loved how he played for Real Madrid. He is a scorer and would be a reinforcement that we could really use," he continued.
"Arsenal are one of the biggest teams in England and this summer they are working towards good signings to break that [trophy-less] streak."