The Germany international has yet to sign a new deal at the Emirates Stadium, with his current contract expiring in June 2018.
United have been linked with a move for the playmaker, which would see Ozil reunited with his former Real Madrid boss Jose Mourinho.
Though Riedle believes a return to Germany would be the best for Ozil, he believes the riches on offer in the Premier League could sway his decision.
"Ozil going back to Germany? Who knows," Riedle told Omnisport. "There's a rumour that he goes to Manchester United. He shouldn't do it.
"Ozil is a quality player. If you see his skills, it's just amazing what he can do on the pitch. We would be very happy if he comes back to a club in Germany, for sure. But I'm not his agent so I don't know where he ends up.
"Best option is, from my point, if he would come to the Bundesliga. It's a really good option because we get another national player back in our league.
"But if he is looking only for the money, then it would be very difficult to find the same kind of money in the German league than he can find in the Premier League."