Based on "enterprise value," the Spanish giant is worth $3.67 billion, with Manchester United ($3.65bn) falling to second and Bundesliga champion Bayern Munich ($3.07bn) rising to third.
The report is based on the 2016-17 and 2017-18 seasons -- when Real won the Champions League -- and takes into account profitability, broadcasting rights, popularity, sporting potential and stadium value.
On the field, Real Madrid has endured a testing season after finishing third in La Liga and exiting the Champions League before the quarterfinal stage. Zinedine Zidane returned to manage the club in March, replacing Argentine Santiago Solari.
English Premier League (EPL) clubs dominate football's rich list with nine clubs in the top 32. The EPL also accounts for 43% of the total aggregate value.
Manchester City ($2.8bn), Chelsea ($2.5bn), Liverpool ($2.3bn), Arsenal ($2.28bn) and Tottenham ($1.91bn) occupy fifth to ninth respectively. Barcelona ($3.05bn) is fourth and Italian champion Juventus ( $1.76bn) 10th.
This year, 13 of the 32 most prominent European clubs were valued in excess of one billion euros.
Andrea Sartori, KPMG's global head of sports, said the value of the football industry had grown by 9% over the past year.
New to list are Scotland's Celtic, in 30th, and Spain's Villarreal, in 31st, valued at $287m and $282m respectively.