RealMadrid have identified the Man City star as their top January transfer priority, and have valued the player at around the €40m mark.
Bayern Munich boss Pep Guardiola admires the Argentina international, but the German giants look set to snap up Robert Lewandowski instead next summer.
That could give the La Liga side a free run at the City forward, although Manuel Pellegrini is unlikely to be open to bids for the club's star forward.
Aguero scored two in a superb display against Manchester United last month, and he's been City's most consistent forward this season.
Injury ruled him out of the trip to Aston Villa on Saturday - a match City lost 3-2 - but he's expected to return to the starting lineup against Bayern Munich on Wednesday evening
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