At the moment Madrid's decision to release Modric is certainly a difficult decision to accept after Modric's service for almost 12 years in Madrid, but it is quite natural that if we look at his age which is now 38 years old, I think Madrid's ambition to regenerate his squad next season is the reason they no longer give Modric a contract, while Kroos maybe Madrid can still count on him one more season despite his age of only 34 years now, Although Modric is still able to play despite his age, but I think to play in European competitions will certainly be more difficult for him, especially now Modric is prone to injuries so that when facing fierce competition next season, of course Madrid needs players who are 100% ready.
Playing in the Arab League might be an option for Modric to continue his football career, currently the Arab League is one of the potential destinations for former European football stars to continue their careers and of course by getting a very large salary and maybe even double the salary they received from the previous club, At this time I think Al Hillal offer of Modric for join them next season is an offer worth accepting, let alone they dare to pay Modric salary equivalent to Ronaldo's salary.
Look at their midfield, they have camavinga, tchouameni, jude, valverde and maybe some other players that I am missing at midfield and all of them are young players. This doesn't mean that Modric is a bad player, he is still a great player but Real do not really "need" him. That means Modric needs to start looking for somewhere he can go to this summer, otherwise things will not be great for them.
I personally believe that the best thing to do in this case would be going to Saudi league if he can get a lot of money. He is old, he won't make a big impact on any other team, and he could make more money there in 2 seasons than he did all of his life. So, it looks like Saudi league would be the best place to go for Modric.