Xabi Alonso has been making waves as a coach, particularly with his tactical acumen and leadership skills. I believe his success with Leverkusen has shown his ability to adapt and manage a team effectively which could make him a strong candidate for the Madrid job.
I believe Xabi Alonso is the sole candidate for the managerial job at Real Madrid based on his achievements with Bayer Leverkusen in such a short while as coach of the German side. But this doesn't necessarily mean that if he eventually gets the job that he would perform the same way he has done with Leverkusen. In Spain it could be very difficult due to pattern and the tempo of the competition in the Spanish La liga.
Moreover being the coach of Real Madrid comes with lots of responsibilities including consistency, which means if you fail to be consistent for a very long period of time then you might be shown the way out because at Real Madrid they have a very slim tolerance for failure. So if Xabi Alonso finally takes up the job then he should be ready to face all challenges involved.