Earlier this week the 21-year-old revealed he has received offers from Manchester City and Real Madrid, and last month Goal revealed the player himself is keen to join up with Manuel Pellegrini at the Etihad Stadium.
|66/1||Isco is 66/1 with BetVictor to join Bayern Munich
"Who should Bayern sign? There are some very interesting players out there, like Malaga star Isco. He's a class act in midfield," Heynckes told Kicker.
The 21-year-old has a contract with Malaga until 2016, but has a €35 million (£29.8m) buy-out clause.
Bayern have already secured the services of Mario Gotze from Borussia Dortmund and Jan Kirchhoff from Mainz for next season.
Heynckes announced his retirement earlier this week after guiding Bayern to a historic treble this term. The Bavarians had previously already appointed Pep Guardiola as his successor.