The Brazil international has been heavily linked with both clubs but it seems much more likely that he will team up with former boss Jose Mourinho in Madrid despite rumours he had agreed a deal with City.
"What I want is to play at Madrid and for me it would be an honour to be able to do that because I've already said it would be a great opportunity in my career," he told Spanish paper AS.
"With Manchester City I have nothing (agreed), I can assure," he added.
"I'm going to say it very clearly so there are no misunderstandings. I want to play at Madrid, I don't want to go to Manchester City.
"Moreover, I repeat that I have nothing (agreed) with the English club."