The Spurs star, 23, is an £80million Real target.
But Tottenham legend Hod said: “If he does move, I think he will settle easier at another club in England.
“The only ones he can realistically join are Manchester United and Manchester City.
“He could get Champions League football there. But I want him to stay at Tottenham.”
Speaking at yesterday’s Fans All Star global vote launch, Hoddle added: “He is still young enough to secure a move abroad later in life when he could cope better with it.”
Malaga midfielder ISCO, 21, has snubbed Manchester City to join Real Madrid in a £23m deal.