The 23-year-old is expected to move across the Midlands after the transfer window opens tomorrow.
Davis, under contract at Villa until 2024, has been eager to move out on loan in order to get more playing time and has not been short of suitors in the second tier.
He had been on the brink of joining Stoke in the summer only for the deal to be scuppered when he suffered a knee injury.
Since returning to fitness Davis has made just one Premier League appearance, as a substitute in a 1-0 defeat at Southampton, Dean Smith’s final match in charge.
Championship leaders Bournemouth had been among the clubs keeping tabs on his progress but Forest, ninth in the table heading into the New Year just two points adrift of the play-offs, is his expected destination.