The 17-year-old singer has denied reports he has recently struck up a relationship with the 'Come & Get It' hitmaker, but he admits she's ''really pretty'' and they hang out together a lot.
Speaking to People.com, he said: ''Were just friends. She's really cool ... I mean, I think she's really pretty but every time I'm in L.A., she's like, 'Hey you're in L.A., lets hang out. So it's cool.''
However, an industry insider claims the pair have a special connection that goes beyond just a friendship.
They said: ''They've been hanging out over the last few months. They have a lot of respect for each other.''
Selena, 21, and Austin were introduced to each other through their good friend Taylor Swift and were spotted together at the Beats Music concert in Los Angeles on January 24.
Meanwhile, Selena split from Justin Bieber in November 2012 but the pair were spotted hanging out in Los Angeles recently and were believed to have rekindled their romance.
However, the couple reportedly split up again amid reports of a leaked text message conversation between the pair in which Selena told Justin - who was arrested last week for driving under the influence (DUI), driving with an expired license and resisting arrest - to seek help in rehab.