The winger, who can also play up front, was linked with Manchester United in January of last year but is regarded by Los Blancos as one of their most promising young talentsReal Madrid boss Jose Mourinho has decided to add Alvaro Morata to his squad for next season, according to Marca.
The Portuguese coach apparently feels that the versatile attacker is now ready for the first team, having spent the last two years lining out for Real Madrid Castilla.
Morata, who can play up front, 'in the hole' or on the wing, is a product of Atletico Madrid's youth team but he arrived at the Santiago Bernabeu via Getafa, in 2008.
The 19-year-old has made just one previous appearance for Los Blancos in La Liga, coming on as a substitute in a 3-1 win over Zaragoza in December 2010.
Manchester United reportedly tried to lure Morata to Old Trafford the following month but the player ultimately penned a contract extension that ties him to the Spanish champions until 2015.