The midfielder, who is currently on loan at Swansea City until the end of the season, has two years left on his contract with the Bundesliga side.
Despite making no secret of his desire to stay in England, Babbel says that the 22-year-old will be expected to report for pre-season training if no deal is made with another team.
"The fact is that Gylfi Sigurdsson will be at the club come June 18," the manager told Sportinformationsdienst.
"I am able to confirm we have been talking to each other. Of course, he told me he would definitely want to remain in England.
"As long as we are not receiving anything, this is not an issue for me, and we will keep on expecting him to be around."
Hoffenheim signed Sigurdsson for £7m from Reading in 2010.