The most common and most likely answer to this crossword clue is the 7 letter word GRANADA
I've seen this crossword clue in The Daily Telegraph
G
R
A
N
A
D
A
More clues leading to the result GRANADA
- Broadcaster’s old lady needing a lawyer
- Imposing area around a Spanish city
- In spring, ran a dairy for provincial capital
- Relative almost passing round a European city
- Imposing area outside a Spanish location
- Splendid article about a Spanish city
- Fine start to afternoon going round a Spanish city
- Large area outside a Spanish town
- Father’s father loses direction, heads for Spanish city
- German managed a district attorney in this province
Buddy explains!

The straight part
We know that "Spanish city" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case spanish city = granada.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.