Celta are interested in taking him back to Balaidos, though they have warned publicly that he would have to take a pay cut for that to happen.
Sevilla and Betis are also in the hunt and the latter named have already held talks with Nolito's representatives.
They are exploring the possibility of a loan deal with a view to splitting the forward's salary of around £3.4m per year, plus bonuses.
Nolito is thought to be keen to return to Spain with a view to earning a place in his country's squad for next summer's World Cup.
City, if they were to sell him outright, would struggle to recoup anything like the money they paid Celta last July given none of the clubs currently interested in his signature could afford his wages.
Nolito was one of six senior signings made by Pep Guardiola last summer and initially appeared to represent an astute purchase.
He scored four times in City's opening 11 games of the season and offered Guardiola a useful option from the bench.
But he fell out of favour over the Christmas period, with Guardiola only admitting that he had made his decision based on what he had seen in training.
The former Barcelona man has missed out on seven Premier League squads since the New Year's Eve trip to Anfield and has failed to get off the bench in a further six matches.