Mbappe is expected to join Real as his deal with PSG expires this summer.
Van Nistelrooy told AS: "Kylian is a very intelligent player and I'm sure he thinks it will improve his career. He is still very young, and to be able to win the Ballon d'Or he should play for Real Madrid."
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On where Mbappe will fit in Real's attack, he added: "It is clear that it is compatible.
"Who plays as 'number nine' will vary during the matches, because Ancelotti gives the players so much freedom in the offensive. Sometimes Mbapp will start in that position, sometimes Vincius, just like it has been this year, even Rodrygo. The speed of that trio, with Bellingham right behind them, will be unstoppable."