Spain: Regional 2024 Doing Business In Update

Published on May 16, 2024

2024 Spain Regional Update

Firm Name: Cuatrecasas
Author: Alba López-Agudiña

1. How is the political environment impacting business in or with your country?

The geopolitical situation (war in Ukraine, the Israel/Palestine conflict, etc.) and the impact of the current cost of financing are directly affecting the M&A market in Spain. During 2023, we have seen a slowdown. Depending on the source, the decrease ranges from 7% to 25% on the value and number of transactions.

Deals take longer to sign and close than before, and we are seeing more aborted deals than in previous years.

We expected a clear recovery during 2024, but this is slowly moving forward for now. We still hope the activity level will increase in the second semester of 2024.

2. Which countries have you previously collaborated with and do you see potential for future collaboration with on cross-border matters within the region?

We are frequently involved in transactions where companies and funds whose management teams are based in the US, UK, France, and Germany acquire assets and companies in Spain. Vehicles and structures are incorporated in those countries and also in Ireland and Luxembourg. Recently, we have also seen a number of investors come from the Nordic countries to Spain.

The main destination of outbound investments from Spain is Portugal and Latin America.

3. What legislation has recently changed or is changing that a potential international client should be aware of?

International clients should be aware of the foreign direct investments (FDI) regulations, as a specific authorization to be granted by the government may be required when the investment meets certain parameters related to (i) the investment in strategic sectors that may affect public security, public order or public health; or (ii) the investor's profile, such as companies directly or indirectly controlled by a third-country government.

Particularly in the real estate sector, a new Housing Act was approved last May 2023, with further content published last March 2024. This Housing Act is aimed at regulating the stressed residential market in Spain and affects new developments of residential units and leases for residential purposes of any existing buildings. Among the most controversial measures, there is a cap on the rents that can be agreed upon, which, for now, is only applicable in the Catalonia region.