The Brazil star has been consistently linked with a move to the Liga champions in recent weeks, having reportedly failed to settle in France following his world-record €222million switch from Barcelona last August.
Guti, now a youth coach for Madrid, believes the Santiago Bernabeu is the only logical destination for Neymar if he decides to cut short his time in Ligue 1.
"Hopefully, he'll wear the shirt in future," he told Cadena Ser. "If he wants to advance and to scale new heights, it's only Real Madrid left for him.
"In the end, he was at an important club like Barcelona and now he is at another in PSG but you only really get to see him in the Champions League. All that is missing for him is Real Madrid."
Rumours of interest in Neymar has led to speculation over the future of Madrid's 'BBC' attacking trio.
Cristiano Ronaldo has been tipped to join PSG and Manchester United in the past, while Karim Benzema and Gareth Bale are said to be fighting to save themselves after underwhelming seasons.
Guti thinks only Ronaldo is "untouchable" in Zinedine Zidane's side and claimed the Portugal international's attacking team-mates must prove their worth to the club.
"There's nobody untouchable any more, just Cristiano, because he's earned it," said Guti. "[Bale and Benzema] are great players and if they are at the top level, they are very important players for Real Madrid.
"But what Zidane has made crystal clear is that he has a great squad and anyone who proves to him that he can play will play. From now on, everyone has to put on their work overalls and try to do the best to get minutes with Zidane."