The attacking midfielder gradually fell out of favour at the Santiago Bernabeu after initially impressing in the wake of an €80 million move from Monaco which came on the back of an immense 2014 World Cup showing.
He also got off to a slow start in Munich, initially struggling to get into Carlo Ancelotti's starting XI on a regular basis, but things have improved since the Italian's dismissal.
James has become an important part of Heynckes' team and has so far managed four goals and six assists from 12 Bundesliga starts.
And, although Heynckes expects James to keep keeping better, he could not hide his pleasure at the Colombian's impact.
"In his current form, obviously James is a godsend for Bayern," Heynckes told reporters at his pre-match news conference ahead of Tuesday's DFB-Pokal clash with Paderborn. "It's not easy, in another country with a different culture, a different mentality and he is doing very well, playing at a very high level, but he can do it better.
"It was well known that James was no longer satisfied in Madrid
"He didn't get the time that such a player deserves, and then it is logical to get the player in. James is an instant hit.
"How he acts and integrates, how he laughs again and is relaxed... He has arrived and is happy in Munich.
Heynckes also provided an update on Thiago Alcantara's fitness, with the Spain international suffering a muscular injury in November which has kept him out since.
The manager will not be rushing him back but suspects Thiago could feature in full training again on Wednesday.
"It's pleasing to see how Thiago is doing in his rehab," Heynckes said. "He will be able to take part in today's [Monday] session fully and I think he might be able to train full-time again from Wednesday on.
"I'll talk to the doctors again. The player wants to play as fast as possible, but we do not take any chances.
"Another injury would be terrible, as he can be another important element in our game and he has dreams too, not only with Bayern, but also with the Spanish national team."
Heynckes confirmed that Jerome Boateng will miss Tuesday's trip with a stomach virus, the same issue which makes Arturo Vidal doubtful.