Carlo Ancelotti's side ran out 3-0 winners in the Copa del Rey first-leg semifinal clash and the Atletico Madrid boss conceded Madrid was a worthy winner.
Deflected strikes from Pepe and Angel Di Maria either side of Jese Rodriguez's 57th-minute goal put Carlo Ancelotti's side in control of the semifinal tie, and Simeone admits los Blancos deserved their win.
"I think Madrid played a very good game and we have to congratulate them. We couldn't find our way," he said after the match. "We had [Diego] Godin's chance, but we couldn't take it.
"Two goals came off the bodies of a player. There weren't many other big chances, but this was a great result for our opponent.
"We could not connect as we wanted, they pressed very well. Real Madrid are always strong. I've rarely seen them be less strong.
"There are 90 minutes of football left to play."
Striker Diego Costa was booked for a petulant kick out at Di Maria and will miss the return leg as a result.
However, Simeone refused to blame referee Clos Gomez - who oversaw last season's final between the two sides - for failing to keep a lid on the aggressive side of the match.
"The referee did not influence things, just as in the final [last season]. He is a great referee," said Simeone.
The return leg takes place at the Vicente Calderon on Feb. 11.