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The capital club sit four points clear of their bitter rivals heading into the Santiago Bernabeu clash, but the Blaugrana won the meeting at Camp Nou earlier this season.
Former Denmark international Laudrup feels that home advantage could be key when the two sides meet this weekend and has tipped Carlo Ancelotti's men for success.
"Real Madrid are favourites because they are playing at home, but both teams have players who can change the balance game," he told Cadena COPE.
"Real Madrid were behind but now have the chance to knock a rival like Barcelona out of the title race because it a seven-point deficit with nine games would be very complicated."
Both clubs made big money signings in the summer, with Barca bringing Neymar to the club and Madrid breaking the world transfer record to lure Gareth Bale to the Bernabeu, and Laudrup feels both could do well in La Liga.
"You have to give Bale and Neymar time, but when you pay so much money for them, patience isn't the word because you pay immediately," said the former Swansea boss.
"They are both good but they have to adapt to Real Madrid and Barcelona's games because. Bale has been injured, but hasn't had a bad year."
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