The Belgium international is keen on furthering his career in the Premier League but turned down a move to St Andrew's.
City boss Alex McLeish hinted Dembele had opted for another club and that appears to be Fulham.
"I want to go to a top league and a stable club where I get a good feeling. Also a club where I will play," he told the Noord-Hollands Dagblad.
When asked about Fulham, now under Mark Hughes, he added: "A really nice club. And as I am just 23, I still have a number of years to make a move to a bigger club."