The former Besiktas man dreams of seeing the City playmaker representing Los Blancos, and believes that Kaka may have to leave the Santiago Bernabeu to find his form
The former Valencia man played an integral role in City's successful Premier League campaign last season, and Guti feels that he would be a better option than Tottenham's Luka Modric.
"As a Madridista, I close my eyes, and see him in Madrid," he revealed to AS. "There would be no better signing. In his position, he is the best of the best.
"Hopefully, he can come and offer a lot. It would be a great addition to a template that is already too good in itself.
"[Modric] is very talented. He's proven himself to be very good for Tottenham and Croatia, where there are flashes of quality. But I look up to Silva, who is above him."
Jose Mourinho led Real Madrid to Liga glory last season, and Guti admitted that he was delighted with his former side's performances, while singling out Mesut Ozil for praise.
"Madrid are doing very well, are forming a good group, and creating a style of play. There's a chance of [winning La Liga] again. They'll continue to fight against Barcelona and all the other teams who are capable of winning.
"One aim of the fans will be winning the Champions League. Neither Chelsea nor Bayern Munich were better [than Madrid] in Europe last season. Hopefully we can do better next year.
"Real have found a great player in Ozil, especially since he did not cost much money."
Finally, the former Besiktas man discussed Kaka's situation at the club, and said that the Brazilian is going through a complicated period in his career.
"He has had a bad stage professionally. He has played with a lot of trouble, and that's always complicated. He hasn't had any luck here. If he leaves, he would be able to start anew," he concluded.