That is according to French journalist Julien Laurens, who says the Paris Saint-Germain striker 'dreams' of playing for Los Blancos.
Mbappe is facing an uncertain future at Parc des Princes with the 24-year-old having just a year left to run on his contract.
The 2018 World Cup winner has told the Ligue 1 champions he will not be extending his stay - leading to speculation he could be sold this summer.
Though the player himself has all-but declared he intends to leave on a free transfer in 2024.
But it is believed that PSG are looking to cash in on the ex-Monaco star should he refuse to pen fresh terms.
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According to Spanish news outlet El Chiringuito TV, Liverpool have lodged an astonishing £170million offer to secure Mbappe's services.
Meanwhile the Independent have claimed that should Mbappe make the move to the Premier League, his preference would be to join Arsenal as he is an admirer of Mikel Arteta's philosophy.
However, broadcaster and PSG fan Laurens has ruled out Mbappe playing in England when providing an update on the player's future on White and Jordan.
He said: "For me, the only option right now for PSG, I mean Kylian is in a win-win situation.
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"He stays, he doesn't extend, he's a free agent in a year's time and he can choose, he will have every club at his feet.
"If they really want to sell him and almost force a move, force him to go, Real Madrid right now are the only club he wants to join, they're the only club who can really afford him.
"English clubs can try and Man City can probably put the money on the table, but Real Madrid has always been his dream as we've said many, many times on the show and I think this is the only club that he would be OK to go to anyway.
"So for PSG the only thing they can do to save this situation is to say to him, 'Listen, we want to keep you for another year, but you can't leave on a free in a year's time.
"'So you want to stay another year, why don't we agree the transfer now, you sign that extension so you're not out of contract in June 2024, but in June 2025, but we agree to let you go to Real Madrid in a year's time.
"'So June 2024 you're not with us anymore, you're with Real Madrid, we've kept you a year.
"'Real Madrid have signed you now for example in the next two weeks, we've all agreed a reasonable fee and then everybody's a winner.
"'Real Madrid, OK will have to wait another year, but they have you and you'll be 25 and you're still young enough, you will go there, you will have another last season at PSG, one more time trying to get the Champions League for example and we don't lose you for free'.
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"But even that, even saying it to you guys, it feels unrealistic. So I think they're in a very difficult position."
Stunning reports emerged earlier in the week that Mbappe is demanding a £206m-a-yearly salary if he was to leave this window.