However, Watzke is hopeful that the 23-year-old will remain at Signal Iduna Park for the foreseeable future.
"I think he will still be playing at Dortmund beyond the end of next season, but you can never be sure," said Watzke.
"We want to keep him and extend his contract. He wants to go to England? I don't know, but I keep hearing things in the press."
Kagawa moved to Dortmund from Cerezo Osaka in 2010.