The player has supposedly told new Real boss Julen Lopetegui he is keen to quit the club this summer.
And Real are now ready to grant him his wish.
Kovacic hinted at a move away back in June, saying: "I would like to play more in Madrid because I love football and being on the pitch, and I know that it's difficult to play in Madrid.
“Especially because I was very young, I understand the situation, but for that reason I think the best for me it is that I go to another club where I have the opportunity to play regularly as a starter.
Real Madrid transfer news: Man Utd and Liverpool will battle for Mateo Kovacic (Image: GETTY)
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“It's an opportunity that I think I can have and that I want right now.”
Marca add, though, that United and Liverpool are not alone in pursuing Kovacic.
Bayern Munich and Juventus would both love to snap him up.
And Pep Guardiola would also welcome the 24-year-old at Manchester City, with Real slapping a £50million price tag on him.