Spurs sit one point and one place above the Gunners ahead of their trip to the Emirates on Saturday, hoping to finish above their rivals for the first time in the Premier League era.
Both teams have made inconsistent starts to the their top-flight campaigns, sitting seventh and eighth respectively and Freund believes this shows how much the gap has closed between the two teams.
He told the Daily Mail: "Spurs are really close to Arsenal, we are definitely in a better position."
"In my time they used to be involved in the title race every year and we finished ninth or 10th.
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"It would be great to finish above Arsenal, it would be a great experience for me too because it has never happened for me in the past.
"I can't wait for that game. It's a special game. There are only two of these games every season."
The former German international, who made 120 appearances for the White Hart Lane club in a five-year spell as a player, has also defended Arsene Wenger's managerial record ahead of the game, amid recent criticism, believing he has done a great job for the team.
"He is doing a fantastic job," Freund added.
"Arsenal have played Champions League every year and that is a lot of money for the club. That makes it a lot easier for them to buy players."