The 21-year-old, who has also reportedly attracted interest from Tottenham and Everton, insists that he is not house-hunting in London but admits the attraction of the Gunners
The 21-year-old arrived in the Bundesliga from FC Zurich last summer and has scored 15 goals in 26 appearances this season.
|17/10||Arsenal are 17/10 with Bet365 to beat Everton next Sunday|
"Arsenal are believed to be interested in Drmic," Matthaus said on German television while working as a pundit.
"I know for a fact that his wife is looking for a flat in London. I assume that Drmic will finish the season with Nurnberg hopefully successful and Nurnberg will sell him afterwards with a good profit - in this case to Arsenal."
But Drmic told Bild: "At the moment, I'm single. There is no one house-hunting in London."
"What will happen in the future, I don't know. Any boy dreams about playing for Arsenal."
Everton and Arsenal's north London rivals Tottenham have also been linked with Drmic, with a fee of around £6 million touted by reports in the German media.
Nurnberg boss Martin Bader is pessimistic on his hopes of keeping his hottest property, adding: "I would be naive to think that nobody would recognise Josip and I cannot guarantee that he'll stay."