In a year defined by the global Covid-19 crisis, market developments are best viewed through the prism of the coronavirus. Pre-pandemic, the Spanish market continued in its upward trajectory, building on the last few years of growth, with enthusiasm in investment, inbound and outbound (particularly to Latin America), large M&A deals, infrastructure projects on the rise and real estate investment booming.

This positive trend lasted until around March and the first strict Spanish lockdown. When the monumental impact the virus and subsequent control measures would have on the economy started to become clear – what we may term the ‘post-Covid’ world – the market trends started to look significantly different.

The affects are quite sector specific, and were still becoming clear as the world moved into 2021. However, the complex and diverse responses can be broadly summed up in the following way: i) existing trends being accelerated, notably digitisation projects, remote working and the ongoing decline of brick-and-mortar retail; ii) a massive hit to certain sectors, namely tourism and hospitality, which had a knock-on effect for an economy very reliant on these industries; iii) increased caution from investors, with deals still happening but at a lower rate; and iv) planning and preparation for a potential economic crash which, as in many countries around the world, was temporarily kicked down the road by government measures and lending in order to get the virus under control.

In terms of specific key sectors, the real estate space has seen a redirection of investment. Logistics is booming, as are student accommodation and care homes, and there has been a significant increase in build-to-rent, which is not a traditional market in Spain.

In banking and M&A, the standout deal was the merger between Caixa and Bankia to create Spain’s largest bank. This followed relatively hot on the heels of the Banco Santander acquisition of Banco Popular, illustrating the continued consolidation and strengthening of the sector.

One relatively consistent thread pre- and post-Covid is the energy and renewables sector, where there is still a lot of activity. Investment in new technology has also been on the rise for some time and the Covid crisis has accelerated many trends in the TMT area, where the market also remains active. Another continuity with previous years is the ongoing concern for many companies around Brexit, with preparations continuing even while Covid-19 took centre stage.

Looking forward, measures put in place by the Spanish government at the beginning of the first lockdown delayed many bankruptcies and insolvencies, though a lot businesses are expecting a tough spring, and one which will likely be a busy one for bankruptcy and insolvency lawyers.

The legal market itself remains relatively stable. Renowned local firms Uría Menéndez, Garrigues and Cuatrecasas, along with UK firms Clifford Chance, Linklaters and Allen & Overy, still dominate in many key areas, particularly in M&A, banking, R&I and dispute resolution. Pérez-Llorca continues to invest and has made several significant hires, notably in the areas of insurance, dispute resolution and real estate. Latham & Watkins LLP has also not slowed its expansion in Spain; 2020 saw the firm boosting its real estate capacity with several prominent additions. In Barcelona, a major development was RCD joining with DWF, giving the now DWF-RCD an increased international capacity.