Kaltz, who made 581 appearances for HSV, admits he has not seen a bigger talent pull on the club's jersey since his own playing days when Hamburg won three Bundesliga titles and the European Cup.
the 64-year-old told Sport-Bild:"Fiete Arp has what others do not have. He is the only one in the team who has good movement and recognises opportunities. Arp can not be kept if a good club comes."
Chelsea are reported to be favourites to sign the 17-year-old forward who has scored two goals in four Bundesliga starts since breaking into the senior line-up this season.
He scored five goals in the Under-17 World Cup Finals in India this Autumn.