The Ligue 1 leaders meet Zinedine Zidane's side in the Champions League round of 16, with Madrid badly slumping domestically.
But Emery said he would not underestimate Madrid – who are 19 points behind Barcelona in La Liga – because they had a squad of players that stepped up in key moments.
While Madrid star Cristiano Ronaldo has struggled in La Liga this season, the Portuguese star has netted nine times in six Champions League games.
That has helped Madrid into the last 16 in their bid to win three consecutive Champions League titles.
"Right now, Real Madrid are the best team in the world, in terms of the number of trophies they've won and the fact that they have the best players," Emery told a news conference Friday.
"Cristiano Ronaldo is an example. In the biggest games, the best players turn up.
"They have those kinds of players and we do too."
The first leg of the last-16 tie will be played at the Santiago Bernabeu Wednesday.