The defender currently earns around £70,000 at Stamford Bridge and he has three years left on his current deal.
James is undoubtedly one of the best right-backs in the Premier League and it is hardly a surprise that the top European clubs are monitoring him.
Real Madrid will have to find a long-term replacement for Dani Carvajal and James could prove to be an exceptional signing for Carlo Ancelotti’s side.
The England international is impressive defensively and he is very effective going forward. He has the potential to develop into a world-class footballer in the future.
Meanwhile, Manchester City will have to find a long-term alternative to Kyle Walker and James seems like an ideal fit.
It seems highly unlikely that Chelsea will let a key player like James leave this summer especially when they have already lost players like Antonio Rudiger and Andreas Christensen.
Furthermore, James has three years left on his current deal and therefore Chelsea are under no pressure to cash in on him.
Even if the defender refuses to sign a new contract with them, the Blues are highly unlikely to let him leave anytime soon.
James is a fan favourite at Stamford Bridge and Chelsea must do everything in their power to extend his contract as soon as possible.