Minerva, the City office developer, revealed yesterday that it had received a takeover proposal from Limitless, the Dubai-based property investment group, valuing the company at around £258 million.

However, investors were sceptical about whether a deal would go through, despite the company indicating that it would be prepared to recommend an offer at 160p per share if it materialised.

Minerva said the proposal was subject to conditions, including due diligence, and that although discussions were continuing there could be no certainty an offer would be forthcoming, even if pre-conditions were met.

The offer, described by Limitless as final, is more than double the value of Minerva's shares at the start of trading yesterday, but less than half their value a year ago.

Minerva's share price has been in freefall over the past year as valuations of commercial property plummeted on fears that demand for office space would dry up as the economy slowed down.

The company has not placed a value on its property, which includes two large office developments in the City and the rebuilding of Croydon's town centre, since the end of last year and valuations have fallen in the past seven months.

The Royal Institute of Chartered Surveyors said yesterday that demand for commercial property had fallen to its lowest level in a decade, with the retail sector worst hit.

Limitless, part of the Dubai World group, has nine projects around the world, worth around £100 billion, and has been keen to get a foothold in the UK for some time. The group first indicated that it was interested in Minerva in May and is understood to have made a bid in the region of 140p a share, which was rejected by the board.

Minerva's shares were down 7p at 113p today.

One City analyst said he thought that the board would find it difficult to recommend a 160p a share offer, believing they would take a longer view to restore the company's value.

However, others suggested that such an offer would please shareholders, with one trader saying he would bite Limitless' hand off at 160p.

Commerz Real, the property investment arm of German bank Commerzbank, has also taken advantage of tumbling commercial property values in the UK, paying €124 million (£98.5 billion) for the Athene Place office building in the City.

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