City had emerged as favourites to sign the Malaga youngster after being informed of his determination to sign for a club who could offer him a key role in the first-team.
With German midfielder Mesut Ozil and Brazilian playmaker Kaka already at Real, Isco had voiced concerns that he could become a peripheral figure at the Bernabeu, despite emerging as the star player of Spain’s European U-21 Championship success in Israel this month.
However, with City growing in confidence that the lure of regular football under former Malaga coach Manuel Pellegrini would convince Isco to reject Real for a move to the Etihad, Zidane’s intervention has now left Real expecting to secure his signature.
Former Real captain Zidane, now director of football at the Bernabeu, is understood to have held several discussions with Isco’s father to allay fears that the player would be overlooked in Madrid.
Zidane is also believed to have highlighted Madrid’s proximity to Malaga via high-speed rail link in an effort to appeal to Isco’s desire to remain close to his family.
Manchester City remain confident that they will sign Isco, but Malaga vice-president Moayad Shatat has warned that the player’s impressive tournament in Israel has reinforced his £30m transfer valuation.