Despite arriving at the Amex Stadium as a highly-regarded prospect in February 2021, Caicedo failed to make an impact during his first year contracted to the Seagulls.
However, since returning from a loan spell at Beerschot at the turn of the year, the 20-year-old has developed into one of the best midfielders in the Premier League.
Caicedo has made a total of 20 starts in the top flight, his latest impressive showing coming during Saturday's 4-1 victory over Chelsea.
As a result of his eye-catching displays, the Ecuador international is now being frequently linked with a transfer to a bigger club at some point during 2023.
Chelsea - who are managed by former Brighton boss Graham Potter - Liverpool and Manchester United have all been linked with the player in recent months.
Nevertheless, according to Fichajes, Real Madrid are also contemplating whether to get involved in the race to sign Caicedo next summer.
The report suggests that Los Blancos president Florentino Perez has taken note of Caicedo's performances and feels that he could represent the ideal addition in the centre of the pitch.
That alleged stance comes at a time when Real are also admirers of Borussia Dortmund's Jude Bellingham, who may be open to moving to the Bernabeu ahead of 2023-24.
Given the finances involved and Real also requiring another centre forward, both Caicedo and Bellingham are unlikely to make the switch to the European champions during the same transfer window.
Brighton will allegedly only consider any offers in the region of €80m (£68.8m), although they will be wary of Caicedo's contract having just two years left to run come the summer.
Officials at the English side are hoping that Caicedo's reputation will rise at the upcoming World Cup with the prospect due to represent Ecuador.
The former Independiente del Valle youngster has earned more caps for his country than he has made appearances for Brighton, highlighting the speed of his development during 2022.