The former Tottenham playmaker has been linked with a move to Italy but the Inter youngster feels his compatriot will remain at the Santiago Bernabeu
Modric only signed for los Blancos from Tottenham Hotspur last year but he has struggled to nail down a regular berth in Jose Mourinho's line-up this season and has recently been linked with a switch to Serie A.
However, Kovacic does not think that Modric is considering bringing an end to his time in the Spanish capital just yet.
"He’s a phenomenal player, but I think he’ll stay in Madrid," the teenager told Sky Sport Italia. "It’s great to play with him on the national team because he’s so talented, and it would be great if he came to Inter.
"But, again, I believe he’ll stay in Spain."
Inter have endured a miserable campaign, with their hopes of qualifying for Europe having been dashed by a dreadful loss of form after a bright start to the season, in addition to a shockingly high amount of injuries.
With the Nerazzurri set to finish ninth in the standings, speculation has continued to mount over coach Andrea Stramaccioni's future at the club, but Kovacic insists he is a fan of the Roman.
"He’s young and a good coach, but these kinds of decisions on the future aren’t up to me," the former Dinamo Zagreb man stated.
"But next year’s Inter will be better than this year’s. We have no choice but to do better."
In just six months Kovacic has established himself as one of the brightest young talents in Serie A following his €13 million January move, prompting speculation over whether struggling Inter will be able to retain his services for very long.
However, the player himself insists that he intends to spend a significant chunk of his career at San Siro.
"I’m not thinking now about my future," he explained. "But I’m happy here and hope to stay as long as possible."