European Retail S.C.A. SICAV-RAIF Launch in Luxembourg: How to Structure Your Investment Fund

1. Understanding the European Retail Market Landscape

1.1 Capital rotation into resilient retail segments

Investors are increasingly shifting toward retail formats supported by essential spending and daily needs.

Grocery-anchored centers, value retail, and retail parks remain popular because they are less sensitive to economic cycles.

Institutional capital is reentering selected high-street areas in major cities where footfall is stabilizing and tourism has recovered.

Prime assets in Paris, Milan, Madrid, and Munich continue to attract strong demand from global brands and long-term investors.

Value-add strategies remain viable in secondary locations where upgrading tenant mixes or modernizing layouts can unlock higher yields.

1.2 Market size and performance

Europe’s retail real estate transaction volume exceeded an estimated EUR 42 billion in 2024.

Retail parks represented one of the fastest-growing categories, expanding by more than 11% year-on-year in several markets.

High-street vacancy in key European cities remains below 4% on average for prime locations.

Prime rents in Paris and Milan increased modestly, indicating renewed confidence in flagship streets and luxury districts.

Grocery-anchored assets across Germany, Spain, and France deliver yields generally between 4.25% and 5.50%, preserving investor interest in these defensive formats.

1.3 Cross-border resilience

Retail performance varies across Europe but shows clear pockets of strength.

Germany offers a large inventory of retail parks and discount formats anchored by established chains.

France benefits from strong grocery operators and a network of mixed-use urban retail locations.

Spain demonstrates a rebound in consumer spending and stronger performance in neighborhood centers.

Italy continues to be a reference for luxury and fashion-oriented high-street segments.

The Netherlands and the Nordics are advanced in last-mile distribution and ESG-driven retail modernization.

This diversity enables an EU-wide portfolio to benefit from multiple demand drivers and different economic cycles.

2. Why Luxembourg to setup your European Retail S.C.A. SICAV-RAIF

2.1 Investor protection and legal certainty

Luxembourg’s financial environment is known for long-term political and regulatory stability.

The country hosts thousands of cross-border investment vehicles supported by clear legal frameworks and experienced financial institutions.

Regulation is fully aligned with EU directives, which supports investor trust and international compatibility.

Market participants benefit from high governance standards and reliable supervisory practices.

2.2 Controlled flexibility for fund promoters

Fund initiators can launch new structures efficiently while adhering to strict regulatory standards.

Luxembourg offers high levels of customization in terms of strategies, asset classes, and investor profiles.

This balance of flexibility and control makes Luxembourg a preferred jurisdiction for thematic and sector-focused funds, including retail real estate vehicles.

2.3 Global distribution reach

Luxembourg-based vehicles can be distributed across Europe using AIFMD passporting mechanisms.

International investors recognize the jurisdiction’s credibility, which enhances subscription potential and supports long-term fundraising.

Service providers such as administrators, AIFMs, auditors, and depositaries operate within a mature ecosystem optimized for cross-border transactions.

This infrastructure is particularly relevant for a multi-country retail strategy like the European Retail S.C.A. SICAV-RAIF.

3. Société en Commandite par Actions (S.C.A.) Structure: How It Works

3.1 Partnership structure with equity-based capital

The Société en Commandite par Actions (S.C.A.) is a hybrid between a partnership and a corporation.

It allows for share-based capital while preserving the operational flexibility associated with partnership arrangements.

This structure is often used when the initiator wants to maintain strategic control and still offer limited liability to investors.

3.2 General Partner (GP) role

The General Partner holds unlimited liability for the obligations of the S.C.A.

The GP directs the fund’s strategic decisions, including investment policies and high-level governance.

It coordinates with the AIFM, represents the fund in major contractual relationships, and ensures alignment with the investment strategy.

This governance model ties decision-making power to accountability and oversight.

3.3 Limited shareholders

Investors participate as limited shareholders with liability restricted to their capital contributions.

They do not manage day-to-day operations but benefit from defined economic rights and governance protections.

Their rights are usually detailed in the Articles of Incorporation and the Offering Memorandum, including voting rules, redemption terms, and information rights.

3.4 Why S.C.A. fits retail strategies

Retail assets often require active engagement with leasing, refurbishments, and tenant realignment.

The S.C.A. structure ensures the GP can act decisively within a defined governance framework.

This is particularly important when executing value-add plans or repositioning assets across several jurisdictions.

4. SICAV Features for Retail Asset Strategies

4.1 Variable capital structure

The SICAV model enables flexible capital subscriptions and redemptions, subject to the fund’s terms.

Investors can enter or exit according to the rules set out in the prospectus and offering documents.

This dynamic capital mechanism supports strategies that maintain a continuous acquisition and rotation pipeline.

4.2 NAV-based investor entry

Investors subscribe and redeem shares based on the Net Asset Value of the fund.

This creates a transparent and standardized valuation reference for all investors.

The central administrator calculates NAV using recognized valuation methodologies and under the oversight of the AIFM and auditors.

4.3 Multiple share classes

SICAVs permit the creation of different share classes to address varying investor preferences.

Share classes can differentiate currency exposure, distribution policies, fees, and investor categories.

This allows the European Retail S.C.A. SICAV-RAIF to accommodate institutional investors, family offices, and other professional investors in a single structure while respecting their individual constraints.

5. RAIF: Speed and Institutional Governance

5.1 Fast market entry

The RAIF regime does not require prior approval from the CSSF for the fund itself.

As a result, promoters can launch new umbrellas or compartments in a relatively short timeframe, often within 30 to 45 days.

This speed is a major advantage when targeting assets that may trade quickly or in competitive processes.

5.2 Indirect supervision through the AIFM

Although the RAIF is not directly supervised by the regulator, it must appoint an external AIFM licensed under the AIFMD.

The AIFM provides portfolio management and risk management and carries reporting duties toward regulators and investors.

This framework combines flexibility at the fund level with strong institutional oversight at the management level.

5.3 Suitable for multi-compartment structures

The RAIF structure is well-suited for multi-compartment umbrellas.

Each compartment can follow a distinct investment strategy, risk profile, or geographic allocation while benefiting from shared infrastructure.

For a European retail strategy, this means one compartment could focus on high-street assets, another on retail parks, and another on grocery-anchored centers.

6. Investment Strategy of a European Retail S.C.A. SICAV-RAIF

6.1 High-street retail

Prime high-street locations remain highly attractive where tourism, luxury retail, and international brands are present.

Paris, Milan, Barcelona, and Munich continue to show stable tenant interest and robust brand demand.

Vacancy rates in these locations are low, and rents tend to be resilient even in slower growth environments.

6.2 Retail parks and value retail

Retail parks generally offer large parking surfaces and easy access locations.

They often combine discount brands, household goods, and essential services in one destination.

Germany, Poland, Portugal, and the UK demonstrate strong growth in this category, driven by consumer focus on value and convenience.

6.3 Grocery-anchored centers

Grocery-anchored retail is one of the most resilient segments in Europe.

Essential consumption patterns protect revenue streams even in economic downturns.

Operators such as Carrefour, Edeka, Mercadona, and Rewe maintain strong market positions and long-term leasing habits.

6.4 Last-mile retail-linked logistics

Retail logistics has become a central pillar of omnichannel commerce and same-day or next-day delivery expectations.

Last-mile distribution centers located near urban areas ensure rapid delivery and efficient inventory management.

These assets benefit from structural demand linked to e-commerce and hybrid shopping models.

6.5 Geographic diversification

A diversified allocation helps reduce country-specific and regulatory risks.

A possible model allocation might include Germany for retail parks, France for grocery-anchored retail, Spain for neighborhood centers, the Netherlands for last-mile hubs, Italy for fashion high-street, and Nordics for ESG-driven modernization.

This blend allows the European Retail S.C.A. SICAV-RAIF to capture multiple income streams and capital appreciation drivers.

7. Key Features and Benefits

7.1 Structural efficiency

The combination of S.C.A. governance, SICAV capital flexibility, and RAIF speed creates a powerful platform for retail investment strategies.

This structure supports long-term deployment, active management, and compartment-based portfolio design.

7.2 Regulatory alignment

Luxembourg’s legal and regulatory framework is aligned with EU standards and international expectations.

Investors benefit from predictable rules, tested case law, and established administrative practices.

7.3 Portfolio resilience

By focusing on essential retail and stable tenant mixes, the European Retail S.C.A. SICAV-RAIF aims to build portfolios with defensive income characteristics.

Risk can be further controlled by diversification across countries, tenant types, and lease maturities.

7.4 Cross-border deployment

AIFMD passporting allows marketing and investments across EU member states using a single Luxembourg-based setup.

Local SPVs and holding companies can be used to manage assets within each jurisdiction, optimizing tax and legal outcomes.

7.5 Investor-oriented architecture

Professional and well-informed investors benefit from transparent governance, audited NAVs, and regulated service providers.

The S.C.A. SICAV-RAIF format is compatible with the requirements of institutional investors, family offices, and other sophisticated market participants.

8. Governance and Compliance Framework

8.1 AIFM responsibilities

The AIFM is central to the fund’s governance and regulatory footprint.

It manages portfolio composition, risk exposures, leverage levels, and liquidity metrics.

The AIFM also oversees regulatory reporting, investor disclosures, and compliance with AIFMD rules.

8.2 Depositary oversight

The depositary safeguards the assets of the fund and monitors its cash flows.

It ensures that the fund’s operations follow applicable regulations and the documentation agreed with investors.

This role adds a further layer of safety and independence to the governance framework.

8.3 Fund administrator responsibilities

The administrator is responsible for NAV calculations, accounting, and shareholder registry services.

It prepares financial statements and supports regulatory and tax reporting.

Accurate administration is essential for investor confidence and operational integrity.

9. Tax Considerations

9.1 RAIF tax framework

Real estate RAIFs are often structured to achieve tax neutrality at fund level, subject to applicable law and structuring.

The tax position depends on the asset location, use of SPVs, and relevant double tax treaties.

9.2 Annual subscription tax

Eligible RAIFs pay an annual subscription tax of 0.01% on their net assets.

This charge is generally modest compared to the benefits of the structure and its cross-border flexibility.

9.3 Distribution treatment

Luxembourg generally does not impose withholding tax on distributions from qualifying investment funds.

However, investors must obtain jurisdiction-specific tax advice to assess the impact in their home country or tax residence.

10. How to Set Up a Luxembourg European Retail S.C.A. SICAV-RAIF

Damalion supports you in the execution of the following steps:

Step 1: Define strategy and scope

Promoters define the retail strategy, target countries, and risk profile for the fund or each compartment.

Step 2: Select S.C.A. legal form

The S.C.A. form is chosen to balance control, liability, and investor protection.

Step 3: Appoint AIFM

A licensed AIFM is selected to manage portfolio and risk in line with AIFMD requirements.

Step 4: Appoint depositary bank

A Luxembourg-based depositary is appointed to provide safekeeping and oversight.

Step 5: Appoint administrator

A fund administrator is selected for NAV calculation, accounting, and regulatory support.

Step 6: Draft documentation

The Offering Memorandum, Articles of Incorporation, and partnership documentation are drafted.

Step 7: Create SICAV share classes

Share classes are structured according to investor types, currencies, and distribution policies.

Step 8: Implement AML-CFT

Anti-money laundering and counter-terrorist financing procedures are established and enforced.

Step 9: Set up SPVs

Special purpose vehicles are formed in relevant jurisdictions to hold underlying retail assets.

Step 10: Launch fund

The fund is launched and marketed to eligible professional and well-informed investors.

11. Setting up your European Retail S.C.A. SICAV-RAIF

The European Retail S.C.A. SICAV-RAIF provides a robust, flexible structure for retail-focused investment strategies across Europe.

Its combination of S.C.A. governance, SICAV capital flexibility, and RAIF regulatory efficiency is designed to serve professional investors seeking resilient, income-generating portfolios.

With stable fundamentals in essential retail categories and continuing evolution in omnichannel logistics, this Luxembourg vehicle offers a strategically aligned solution for cross-border retail deployment.

Damalion supports investors, entrepreneurs, and family offices with compliant incorporation, banking coordination, and legal and tax alignment for Luxembourg structures. Please contact your Damalion experts now.