The Croatian midfielder feels his compatriot will prove to be an excellent option for the Liga champions if, as expected, his move from Tottenham goes ahead this summer
The Blancos are eager to lure the Croatia international away from White Hart Lane and have long been in talks with Spurs over a summer transfer.
The two clubs have yet to agree terms, but Rakitic is adamant Madrid will not regret their decision to sign Modric if the move eventually materialises.
"Madrid have made a good choice in trying to sign Modric. He will be a great option if he ends up at Real Madrid," Rakitic was quoted as saying by Marca.
"Real will be very satisfied with Luka if they sign him. He's the type of player who enjoys to be near the opponents' goal."
The Liga champions' appeared to have already published a profile of the 26-year-old on their official website on Tuesday, but removed the post shortly after and blamed hackers for the incident.