The 20-year-old, who joined Malaga from Valencia in the summer of 2011, has become one of the Liga side's undisputed star players and made his Spain debut earlier this year in the friendly win over Uruguay.
"It is hard to say what a young player like him can achieve, but he really has all the qualities to become a star. He will become an important part in the history of the national team and Spanish football," Sanz told Goal.com.
He added, "He is a player who only needs time and experience at the highest level. He already proved his worth in his first year at Malaga, and has made another step up this term. He is Malaga's star man."
The gifted midfielder signed a contract extension until 2016 earlier this year, but he recently stated that he would be willing to leave Malaga in order to help the club solve its financial troubles amid ongoing interest from Manchester City.
Sanz has remained coy on whether Isco could leave the club any time soon, but he believes there will be plenty of interest if Malaga were to decide to cash in on the youngster.
"He is rated very highly in European football, not just in Spain, but also in England for example. His performances in Europe in the Champions League have not gone unnoticed elsewhere," Sanz explained. "Additionally, his debut with the national team has only further increased his reputation."
Isco has netted eight goals in 27 La Liga appearances so far this term.