Daikyo Inc., one of Japan's biggest apartment builders, will cut jobs as its largest shareholder Orix Corp., the country's biggest non-bank financial company, considers investing more in the condominium builder.

The Tokyo-based contractor, 40 percent owned by Orix, plans to reduce its 4,000-strong workforce by 15 percent as sales of condominiums continue to fall, the company said in a press release distributed through the Tokyo Stock Exchange. Orix today said it may buy preferred shares in the condo builder.

Daikyo said it now expects a net loss of 51 billion yen ($512 million) for the year ending March 31, compared with its previous forecast of a 9.5 billion yen profit.

Daikyo is suffering from a severe downturn in the market for residential real estate. The number of new condominiums put up for sale in the Tokyo area declined for a 13th month in September, the longest stretch since a 14-month drop through October 1991, as developers try to cut inventories. Condo inventories reached 10,504 units in August, the highest since December 2002, before dropping to 10,411 in September.

Orix lowered its net income target for the year ending March 2009 to 105 billion yen from 175 billion yen. The Tokyo- based company may buy preferred shares to boost Daikyo's capital ratio to 15 percent, which would require about 10 billion yen of additional funds, according to a Bloomberg calculation.

REIT Scrapped

Orix and Daikyo canceled a plan to list a residential real estate investment trust worth 80 billion yen as the companies don't anticipate an ``early recovery'' of the REIT market, according to a statement released today.

Japanese condominium sales may fall for a third year in 2008 as the country's slowing economy and the credit crisis that tightened lending continues to damp demand for residential real estate. The slump in Tokyo's condominium market may last longer than the drop after Japan's asset-price bubble burst in 1990, according to an estimate by the Tokyo-based Real Estate Economic Research Institute.