Modric has made six appearances for the Spanish champions so far this season after his summer arrival from White Hart Lane.
Bale, meanwhile, has previously been linked with a move to Europe and Modric believes Madrid would be the perfect destination.
"He should play for Real Madrid and I hope he'll come," the 27-year-old told BBC Radio Wales. "It would be amazing and I think he can [play for Real Madrid]. He's a good enough player."
By Joe Brewin
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