Morata, 24, had been expected to arrive in the Premier League this summer after he was personally approached by Manchester United manager Jose Mourinho following the release of Zlatan Ibrahimovic and the club's decision to abandon their pursuit of Antoine Griezmann.
United were locked in talks with Real for a number of weeks as a fee was negotiated but while the player was ready to make the move having grown frustrated with a secondary role under Zinedine Zidane in the Spanish capital, a deal was never struck.
Real's £80m valuation of the Spain international saw United suddenly drop their interest and refocus their attention on Everton's Romelu Lukaku. Within days, the Belgium international had signed for the Old Trafford club for £75m.
Chelsea meanwhile had been expected to sign Lukaku for most of the summer with United's last-minute move leaving their plans in disarray with Diego Costa expected to leave the club this summer.
The Blues had been tentatively linked with Morata before United's interest took over and in the wake of Lukaku's move to Old Trafford, reports have suggested Antonio Conte's side have now once again turned to the Spaniard to solve their problem up front.
However, according to Spanish radio station Onda Cero, Morata is now ready to remain in the Spanish capital and does not see a move to Stamford Bridge as an option.
While United were not prepared to meet Real's valuation for the player, they had prepared a very healthy wage package for the former Juventus striker, with Onda Cero adding Morata's contract offer was worth €12m a year.
They also reveal the Spain international had an offer to join Chinese Super League side Tianjin Quanjian in a deal which would see earn a staggering €30m a year. Morata however has no interest in a move to the Far East.