Los Blancos will lock horns with the Bavarians at the Allianz Arena on Tuesday night in the first leg of a Champions League semi-final tie which the Argentine feels brings together two of the game's genuine superpowers.
"I agree that the Madrid and Barcelona are a cut above the rest," Demichelis told MARCA. "But Bayern are in the top three both in terms of football and as an institution.
"It's like a family, even though it is a monstrously big club."
Demichelis, of course, spent seven years in Munich before moving to Malaga and he freely admits that he will be rooting for his former employers against Madrid.
"I will not be hypocritical, it is normal for me to want them to win," he told MARCA. "I'm not cheering for Real!
"I'm a Bayern man and I know that Bayern have a great desire to get through because the final is at the Allianz and also because we lost against Inter at the Bernabeu [in the 2010 final].
"What it is also clear to me is that this is a tie which will be unbelievable tight. It's 50-50, though after the first game it will obviously be tilted more in favour of one side or the other."
Bayern's meeting with Madrid in Munich gets underway at 20.45CET.
Starting last Friday and continuing for 10 weeks, Goal.com is publishing exclusive extracts from Luca Caioli's new book, Ronaldo: The Obsession for Perfection. The second extract, published on Friday, looks at his first footballing forays on the island of Madeira. Don't miss it!