Hi A,
love this case ;-)
There is obviously no right and wrong to answer this case, but the interviewer wants to better understand how you tackle this question or better how you come to good answer.
For example...
If it should be a written answer (which I doubt), you could be creative be making different suggestions of how to use. So you're structure could be: I'll give you a long list and then let's further discuss a short list.
Or, a more likely situation, in a face to face interview, you simply ask the interviewer questions about his/her situation and preferences of how he or she could use the land in order to meet his/her goals.
Like mentioned: There is no right or wrong - you're now in the role of the consultant in order to give advice. Take a decision for a certain framework and then be creative!
Enjoy ;-) Jasper