Germany legend Michael Ballack expects Mesut Ozil to sign a new contract at Arsenal but hinted the lure of top prizes could tempt him to move to Bayern Munich.

Ozil’s current contract at Arsenal expires at the end of next season and the German international is holding out for over £250,000-a-week before he puts pen to paper on an extension.

The Germany international has struggled to reach his pinnacle in recent months and was nigh-on anonymous in Saturday’s 3-1 defeat Chelsea. He remains, however, a crucial component of Arsenal’s side and, at his best, one of the top performers in the Premier League.

Ozil is by all accounts settled in London and recently purchased a new home in Hampstead. Ballack expects that this will sway the 28-year-old to sign a new contract at Arsenal.

“Mesut Ozil is an outstanding footballer,” the former Bayern and Chelsea midfielder told Bild. “Many clubs like him. But he knows that he enjoys a very high place at Arsenal. He lives in London, one of the most beautiful cities ever.

“To this end, Arsenal is a club that has an incredible impact on the world. If you are a top player in England, the cult around you is bigger than in Germany. You are treated more respectfully, especially. These are all reasons for an extension.

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“But if he could win something big, the chance at Bayern is, in my opinion, bigger.”

Ozil is expected to eventually sign a new contract and is deemed more likely to stay at the Emirates than fellow star name Alexis Sanchez, who has attracted interest from Paris St Germain and Juventus.