The Liga giants have found goals hard to come by this season, with a four-game winless run seeing them fail to trouble the scorers.
It is now being suggested that a new frontman could be sought during the January transfer window, with proven cover still required for the departed Cristiano Ronaldo.
"I am a fan of his," Capello told Radio Rai.
"He is a specialist in the penalty area, as was Cristiano Ronaldo, and if you put three balls in the area he hits all three.
"If I were Real Madrid, I would sign him immediately."
Icardi, who Inter are hoping to tie to fresh terms in the near future, has managed 112 goals in 190 appearances for Inter.
That contest will see a potential Madrid striker of the future pitched into direct competition with a proven striker of their past.
Icardi’s countryman, Gonzalo Higuain, is currently starring for the Rossoneri after completing a summer loan switch from Juventus.
Capello worked with him at Real in 2007 and is a big fan of the qualities that the 30-year-old offers.
"He had the great quality of always finding the goal," added the ex-Juve and England coach.
"That means he had coordination, mentality and technical abilities.
"Now he's improved even more because he participates in the action, and playing in Europe has helped him.
"He's a very interesting person on a human level and he's always been a good guy."