Palmer enjoyed a sensational first season at Stamford Bridge, scoring 22 goals and making 11 assists in 33 Premier League games.
The 22-year-old was named on the shortlist for the Premier League player of the year award and ended up winning the gong for young player of the season.
Palmer's form also saw him taken to Euro 2024 as part of Gareth Southgate's England squad, though he has not been presented with many opportunities over in Germany.
When Palmer returns to west London, he will link up with a new manager after Enzo Maresca replaced Mauricio Pochettino in the Stamford Bridge hot-seat.
Former Premier League star Owen was asked whether he sees Palmer staying at Chelsea for the foreseeable future and insisted he cannot see him leaving the Blues for the time being.
However, Owen believes that could all change if Manchester City were to make an audacious move to re-sign a player they sold for PS42.5m last summer.
'People tend to always want to better themselves in life. I mean, it's not just footballers. Most people would try to better themselves.
'He went to Chelsea because he wasn't getting a game at Man City. If he had the opportunity to go to a team that was going to give him more of a chance of winning the league or Champions League, then that's when it becomes interesting.
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'As things stand, are Liverpool more likely to win the Premier League than Chelsea? I would say so but it's not like Liverpool players are guaranteed to win the title.
'But listen, if Man City came back in for him and wanted to spend PS100m, then that's a different question. But I think he'd probably stay put at the moment. '
Manchester City boss Pep Guardiola defended the Premier League champions' decision to sell Palmer back in April.
Arsenal's PS40m transfer deal branded a 'disaster'
'He was asking for two seasons to leave. I said "no, stay". What could we do? I said many times, I didn't give him the minutes that he maybe deserved and wanted, the minutes he now has at Chelsea.
'I understand that completely. I am happy for him because he is a lovely guy. He is playing good and is an incredible threat.'
While he has struggled for minutes at the Euros, Palmer will hope to help England move one step closer to glory on Saturday when they face Switzerland in the quarter-finals.
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