The 18-year-old midfielder has emerged as one of the best young midfield talents in Europe and is already a regular in the Borussia Dortmund team.
The teenager has also earned 12 international caps for England and is wanted at several clubs in the Premier League, not least Liverpool.
The Reds are hugely keen on Bellingham and it was even claimed earlier this season that a move to Anfield for the Dortmund man this coming summer is essentially a done deal.
However, according to Spanish sports daily AS, Real Madrid have joined the race and are plotting to sign him at the end of next season.
Real Madrid believe Modric can carry on for one more season and see Bellingham as his long-term replacement.
They have a good working relationship with Dortmund and are looking to make an approach at the appropriate time.
The midfielder is claimed not to be leaving Dortmund in the summer despite speculation of him being wanted in England.
Bellingham has a natural inclination towards returning to England, but Real Madrid are prepared to lure him at the end of next season.
