NAMA has sought five more years to develop 300 homes as well as retail units, a bar, restaurant and offices on a site in Knocknacarra.
Once valued at €80 million at the height of the boom, the development would now be worth around €30m.
The National Asset Management Agency said that because of the property crash, the project was not viable, until now.
The 23-acre site on the Upper Ballymoneen Road in the townlands of Ballyburke, Mincloon and Keeraun had been owned by Galway ‘Tiger’ developers Declan Gardiner, Joe McGrath and Martin Kearns, but was seized by NAMA in August 2012.
Receivers Con Cronin and Roger Keogh pointed out that when planning permission was granted (by An Bord Pleanála) in 2009, house prices were in the process of dropping by 60% in the city.
They said the developers were not in a position to secure funding and the market continued to deteriorate, leading to them being appointed receivers by NAMA.
The developers had originally sought permission for around 360 homes, but subsequently reduced this to 299 residential units following discussions with planners.
The plans involve the demolition of two existing houses, sheds and outbuildings and the construction of crèche, three retail units (225 square metres) and three office units (212 sqm) and a bar/restaurant (512 sqm).
The site lies beyond Council-owned land opposite the Slí Gheal and Fána Búrca estates.
The residential element involves 299 units in varying design and form, in two and three storey blocks, bin storage, ESB substation, surface and basement car parking and three vehicular access points and road widening along Ballymoneen Road.
NAMA has now sought a five-year Extension of Duration on the planning permission – which is set to expire in July – claiming the development will be completed by the end of 2018.
“The proposed site has remained undeveloped since permission was granted in 2009. The original applicant was not in a position to secure funding for the development and the market deteriorated rapidly in the intervening years, which led to the applicant entering into receivership. Both the local and national property market has declined significantly since the grant of permission.
“On average, house prices have dropped from peak levels by 58.7% in Galway City. The average price for a three-bed unit in Galway City has dropped from €287,000 at the end of 2008 to €130,000 at the end of 2013.
“This has had a dramatic effect on those investing in properties as sites were purchased base on Q4 2008 prices. The subsequent collapse in house prices reduced the viability of the subject development, until now.
“It is the intention of the appointed receiver to ensure that this development is completed and this can only be achieved if an Extension of Duration is granted,” the application reads.
A decision is expected from city planners in mid-April.