The left back's current deal is due to expire in the summer of 2015 and a number of European giants are closely monitoring the 21-year-old's situation.
However, Alaba has made it clear that Bayern is his first choice at this point.
"Bayern are my first option," the Austria international was quoted as saying by TZ. "Contract talks are ongoing at the moment, but there's nothing to be announced just yet."
Alaba joined Bayern from Austria Wien at the age of 16 and has since developed into a key player with the reigning Bundesliga and European champion.
He has made nine league appearances this term, scoring once in the process.