Real paid £80million to sign Cristiano Ronaldo from Manchester United in 2009, and some media reports suggest the Spanish side are prepared to break that world-record fee to take Bale to Santiago Bernabeu.
However, Hoddle, who had spells with Tottenham as a player and a manager and had a spell overseas at Monaco, is eager for Bale to build on a superb campaign last season, and believes it is too early in his career for a move abroad.
"It's a difficult one but if you're talking about the lad himself, I would definitely, if I was advising him, I would say he's not quite ready to go abroad," he told talkSPORT.
"I think he's had a sensational year, for him to pick the reins up in that form would be nigh-on impossible straight away. I don't feel he's quite ready off the pitch to make that move."
Hoddle has been impressed by Bale's consistency in recent seasons, but feels it may take a while for him to settle in Spanish football should he choose to make the switch.
"It's one thing setting a standard, it's keeping the standard which is the hardest thing, the consistency," he added.
"He's been nine out of 10 every game, some of the goals he's scored have been sensational.
"Real Madrid's fans will be purring at the thought of having possibly him and Ronaldo in the same team. They can go back and challenge the world again.
"When you go abroad the first four, five, six months could be difficult for him to regain that form and if his family are not with him 100 per cent all those things come into it.
"I just sense that maybe he might go for the wrong reasons. If he wants to go just for football reasons I think it might be better in a year's time or maybe two years' time."
