The 19-year-old joined Real Madrid from the French club in the summer of 2011 and has been in impressive form so far this season.
"He was at Lens and we might well have caught him there," he told Eurosport. "You have to ask yourself why this player is not playing for Arsenal.
"I'm happy for him because he's carving out a role at one of the world's best clubs. [Madrid coach Jose] Mourinho has chosen him to step in.
"It was a risk for Real Madrid to sign him at his age but, when you have such talent, you can overcome everything. His next challenge is managing the increased media exposure on him, especially now he is in the French national side."
Varane has featured in 20 matches in all competitions for Madrid this campaign.