The Spanish giants are one of a number of top European clubs interested in pricing away the Norwegian from the Signal Iduna Park next summer when his reported €75m release clause becomes active.
The 21-year-old has cemented his place as one of the best strikers in world football since joining Dortmund from Red Bull Salzburg in January 2020.
Haaland has scored 19 goals in 15 appearances across all competitions this season.
"No matter where I go, everyone speaks to you about Erling Haaland," Watzke told German outlet BILD.
"All I know is a guarantee that Real Madrid are very interested in him.
"I could name 25 others now. But I know for sure, it can be that he leaves, but it can also be that he stays. A few days ago I had a very good conversation with Mino Raiola, when we are in a target corridor, the conversations are always quite friendly and that phone call was quite friendly.
"We will certainly have another meeting in the next few weeks. The focus is on the overall development of Haaland.
"Just like with Lewandowski, I would like to be proud of Erling at some point if he wins the Champions League. Personally, I think it's good for him if he stays in the Bundesliga a little longer."
Haaland has a contract with Dortmund until the summer of 2024.
