The 26-year-old was the star of Sevilla's Europa League-winning side but looks set for a move to Madrid's arch-rivals Barcelona after the World Cup
Rakitic's future has been the subject of intense speculation after he played a starring role in Sevilla's Europa League success and fifth-placed finish in La Liga last term.
It is widely expected that the 26-year-old playmaker will complete his move to Barca after playing for Croatia at the World Cup, with Modric disappointed he won't be lining up alongside him for club as well as country.
"It's clear that if it was me, I would have liked him to sign for Madrid, but in the end it wasn't to be and he's gone to Barca," Modric is quoted as saying by Sport.
"I'm delighted for him. He deserves it. When you go to a big club like Barca, which has a global following, it's an important step in your career.
"Everyone has seen this season what he is able to do. He's a great player who is progressing and I am convinced he will be even better next season.
"When you're a Barca player, everything you do has a higher dimension and that is what will happen now with Ivan at the World Cup.
"Sevilla is a great club that comes from winning a European trophy, but Barcelona even more so."
Both Modric and Rakitic are likely to start for Croatia when they take on Brazil in the first game of the World Cup on Thursday.