The former City defender, now on the coaching staff at Malaga, knows Otamendi well from his time at City and with the Argentina squad.
He also believes his friend and ex-team-mate is approaching the very peak if his powers.
“His last season was outstanding,” said Demichelis.
“He showed a huge personality, too. In Pep’s team, central defenders are in a sensitive situation, playing always high, exposed.
“You have to be brave and clever and have a great ability to read the game at every moment because you always have your back uncovered.
“You have to be brave - and Nico is. One of his strengths is his ability to anticipate at all levels.
“He’s not a physical central defender by the Premier League standards, so he has to anticipate in every action, and he has everything to do it.
“I think he is in the best moment of his career.”
Demichelis played 104 times and won one Premier League title and two League Cups during his three-year stay with the Blues.
Capped 51 times by his country, he also says Aymeric Laporte has the capability to become one of the best centre-halves in the world.
“He’s brilliant and still can improve,” he said.
“He’s young and he can become a superlative central defender.
“He’s already at a great level, but in that particular position, you probably become a mature player when you are around your thirties.
“The central defender position is a very strategical one, requires a lot of vision and comprehension of the game and this is something you acquire through the years, but I have been so impressed with him.
"He is young and as I say, he will only get better and better.
"The Club are blessed with fantastic central defenders with Vincent Kompany and John Stones. Any two out of those four make a phenomenal partnership."