In general, land misallocation is defined as economical ineffective urban land development. Land misallocation is due to improper function of land, which effects the insufficient quantity and quality of housing and commercial area. As a result of socio-economic transformation there are left inadequate locations of extensive industrial zones in the cities or city centers. Therefore city space planning should force the use of land according to its value and investment potential. From economic point of view land is a scarcity source which is able to generate income for its owner. On the other hand developers look for possibilities of using land in order to achieve high economic effectiveness of their projects.

The main target of the article is to prove that investment value of land and its investment potential displace inadequate use of land in the city. Authors would like to present how the land value and the investment possibilities change according to land function.