Jose Gaya has left some major clubs disappointed after deciding to stay at Valencia. Juan Manuel Serrano Arce/Getty Images

Promising Valencia defender Jose Gaya has rebuffed reported interest from Real Madrid to sign a new deal tying him to the Mestalla club until 2020.

Gaya, who turns 20 on May 25, is the latest attacking left-back off the Mestalla production line which has also produced Barcelona's Jordi Alba and Bayern Munich's Juan Bernat.

The Alicante-born youngster's displays in his first season as senior starter have led to regular reports of interest from Madrid, with AS writing that Los Blancos saw him as the "new Roberto Carlos," while Manchester City were among other big clubs to reportedly monitor his progress.

However, on the eve of Saturday's La Liga game at Madrid's Estadio Santiago Bernabeu, Valencia announced that the homegrown youngster had agreed a new long-term contract which reports say raises his buyout clause from a previous €18 million to a new level of €50 million.

Gaya told the club's website that he was happy that long negotiations over his future had reached this conclusion.

"I am very happy and proud to extend my deal with Valencia," he said. "It's what I wanted from the beginning and in the end things have turned out as both parties wanted. We've both emerged as winners from this and it is another dream come true.

"It was very exciting to debut in the Primera Division with Valencia, and now I have signed on for five more years. I want to thank the club for this renewal. Now we have a game against Real Madrid, which is always difficult, but we have our strengths and we will be going there to win."

Valencia's general sporting manager Francisco Rufete added that the news showed the club, which has spent big on new players since Singapore businessman Peter Lim took charge last year and is on the verge of qualifying for next season's Champions League, was still concerned with nurturing and rewarding homegrown talent.

"[Gaya] is a homegrown player who is performing at world-class level," Rufete said. "He wanted to stay with us and we should be grateful to the fans, because we are going to have a homegrown talent here for many years.

"Each negotiation process has its moments. It is a day of great joy for the club, for the fans and for our Academy model.

"Jose has brought a lot to the first team and is an example to motivate the players at the Academy. Hopefully we can keep adding players like Gaya and Paco Alcacer to our first team, because this model will give much joy to the fans."