Real Madrid have 10x the quality of Man City, in a much worse league, and despite common belief, defend well when needed. They don't practice all out attack.
They really really don't and they really can't defend for crap. Ramos, Arbaloa, Pepe, the left back they pushed into left wing because he was so incredibly bad defensively, about 3 other truly awful CB's, one half decent CB is about all they have in defence at the moment.
What they have is Diarra(lasa) and Alonso infront of them, shows how massively effective good defensive midfielders are in protecting a truly inept defence.
Even then Real were ripped apart by every great attacking side, they weren't anywhere near the same level as Barca. They most certainly aren't that far ahead of City, Raul's gone, Benzema isn't anywhere near as good as Tevez, not even as good as Ade who I think is pretty awful. They have Ronaldo, on a level only one other team in the world has a player who is on the same level as.
De Jong is better than Alonso, same as Diarra as a DM, half the other Real midfielders are incredibly average. Van Da Vart has 3 great games a year and 30 incredibly average ones, Gago, Guti, several others are so inconsistant and not brilliant when at their best, they are the equivilent of half the Man City midfielders. Bellamy/Robinho are a lot better than Kaka has been in the past year and better than all but Ronaldo in an attacking sense in RM's midfield.
I'd say the sides are pretty much a wash, both with excellent keepers, the difference is the Madrid side is far more established and consistant, but simply not good enough to beat a Barca type team.