According to German news outlet Bild, the Bundesliga side have been forced to lower the 24-year-old's price tag due to three major factors.
The Swiss international has had to endure several injury problems over the past few seasons which has led to him losing his starting spot in Marco Rose's side this season.
The impact of the COVID-19 pandemic has also led to Gladbach to lower their asking price, being prepared to accept a much lower price than beforehand for the defensive midfielder.
Additionally, Zakaria's contract at the club is set to end at the end of next season, and the sporting director of Gladbach, Max Eberl, has completely ruled out the chances of him leaving on a free transfer, and thus indicating that he will be leaving this summer, unless he signs a new contract.
City are very keen on Zakaria, seeing him as a possible replacement for the ageing Fernandinho.
Apart from City, Manchester United are also interested in Zakaria, possibly being the midfielder to replace Nemanja Matic, who has become increasingly out of favour at Old Trafford.
Zakaria's recurrent injury problems have led to him making just 24 appearances this season, with half of those appearances coming from off the bench, rather than from the start.