The Mother City-based outfit is only waiting for Xulu to resolve his issues with Amakhosi, before making a move for him.
A Goal source close to the player has confirmed that the Citizens are not the only team keen on the 25-year-old centre-back.
"There are too many teams that have shown interest in 'Magazi', but Cape Town City are ahead of everyone else and want to sign him. The player is also aware of their interest in him," the source told Goal.
"However, there are unresolved issues with his current club (Chiefs). So, we will see if he would go there," concluded the source.
Xulu was among the seven players 'released' by the Glamour Boys on Tuesday, but with a transfer saga between the club and some of the players looming, it remains to be seen if the former FC Rostov defender would end up at City.