The Barcelona midfielder believes the Rojiblancos are his side's biggest rivals in the hunt for another Liga crown, despite Zinedine Zidane's men being in impressive form
Diego Simeone's side top the standings after 20 matches, though Barca will overtake them should they win their game in hand, while Zinedine Zidane's men are four points off the summit.
Busquets has backed Atletico to sustain their fight to regain the title they won in 2014 and says they can be considered a bigger danger than their neighbours at present.
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"At the moment, you can say Atletico are stronger than Real Madrid," he told Sport. "Everyone believes they'll fight for the title.
"They're getting better all the time, they have very good players and they'll be there until the end of the season."
Eyebrows were raised in Barcelona when Busquets missed out on a place in the Fifa FIFPro World XI despite his performances in Barca's stunning 2015 successes.
But the Spain international was magnanimous in his omission, saying: "Everyone likes to be recognised for their work. But a lot of players missed out who had a very good campaign, like a lot of players from our team who won the treble.
"I prefer to do a good job and the important thing is that we fight for the treble on a collective level and then win two more titles."