Real Estate Function Impact on its Value Exemplified by the City of Gdańsk

There have been important changes in the use of land in city zones in recent years. Agricultural land, as well as residential, industrial, and commercial estates and others are subject to a significant transformation process. The greatest intensity of the transformation is observed in the strict centre of the city and decreases as the distance from the centre grows, becoming of proper level for suburban areas. It is essential to identify these past and current changes in city development of urban and suburban areas in order to evaluate the chance of success of investment projects and to perform real estate valuation. There is an instant question to ask, whether these changes are consistent with the already identified theoretical model or pattern and if it is possible to make acurate forecasts.The general aim of the article is to identify and describe city development models and to examine the differences in the valuation of real estate of different functions, using Gdansk as an example. In particular, the article concerns the differences between:--- value of land assigned for greenery versus land assigned for residential development,--- value of land assigned for commercial activity versus land assigned for residential development,--- value of land assigned for industry versus land assigned for services. For the purpose of the article, the authors have studied the literature of urban economics and real estate markets. Research will be conducted in reference to the city model and will be based on the data obtained from the treasury department of the Gdansk City Hall. Basic research methods include the method of comparison, logical concluding and the method of induction.The results of the study can be useful for real estate valuation, investment decision making and for decisions concerning directions of city and suburb development. The authors formulate a thesis that residential or commercial dedication of land increase the value of real estate significantly and determine the city development model. According to the authors, the relation between the real estate value and city model is bilateral. Consequently, this relation might be a useful tool for increasing real estate value and for city model creation by both private investors and public sector along their own needs, ideas and particular interests