The Germany legend has criticised los Blancos for spending an exorbitant sum on the Wales international and suggests their transfer strategy is outdated
The Spansih giants smashed the world-record transfer fee to bring the Welshman to the Bernabeu from Tottenham, spending €100 million.
However, the Bayern Munich legend feels his lack of big-game experience proves that he is worth nowhere near his price tag.
"Never before has there been such a huge gap between a transfer fee and the actual market value of a player," he wrote in his Bild column.
"If Gareth Bale can be the 'next Tom Cruise' still has to be proven.
"The 24-year-old Welshman had nine Champions League appearances so far and he wasn't able to feature in big tournaments with the Wales national team."
Kahn then went on to criticise Madrid's dealings in the transfer market, arguing their hefty debt and Spain's current economic crisis should deter them from spending big.
"Out of the six most expensive transfers of all time, five were done by Madrid. It's within the club's philosophy to think in superlatives.
"I highly doubt that Real Madrid's approach is still contemporary considering their €600m debt and the economic situation in Spain.
"Furthermore, they recently didn't have success internationally, their last Champions League win was 11 years ago."