Entitlements are generally described as approvals gained from the appropriate governmental jurisdiction that a property falls within to develop it for a particular use.  In Las Vegas, for example, you may have zoning to improve a parcel for a "general commercial" use, which includes a relatively wide variety of uses, but if you want to build something out of the ordinary, you must submit plans and gain additional approvals for that use.  Usually the process entails the submission of detailed architectural plans, renderings, studies and a one or more professional presentation.  Thus, the process of securing entitlements can be costly and it can take up valuable time.

Gaining entitlements for the construction of many improvements removes the roadblocks for a developer / builder to proceed with their project.  Appraisers are often approached by owners with the argument that their hard fought entitlements have significantly enhanced their land value.  Appraisers, however, understand that it is often the case that few individuals in the market would be interested in the property for the specific use approved.  Thus, the entitlement "enhancement" may add little or no value for most market participants.

I have witnessed developers invest significant sums to gain entitlements for the construction of high-rise projects that made absolutely no sense to brokers and market participants.  Their argument when attempting to re-sell the property was that they had gained approval for a much higher development density.  It did not phase them that the location of the site made it unlikely that anyone would ever build the project that they had gained approval for. 

Zoning and entitlements are important factors that can affect land value, however, other factors including; location, supply, demand, size, orientation and infrastructure development are often more important.  A parcel of land with entitlements gained by a developer for a hotel may appear greatly enhanced in value to the developer, but if the site is a mile from a paved road, water services and sewer lines it may not be seen as more valuable that its competitive properties by market participants.  They see the long arduous process of completing the infrastructure development as a significant negative feature.   

There are some entitlements that can often enhance real property value.  Gaining approval for a more intensive use via zoning, from say C-1 (zoning that allows the development a professional) to C-2 (zoning that allows a wide variety of commercial uses) given similar supply and demand for each type, can increase value.  Zoning changes that offer more development flexibility or more development opportunities often increases the demand for them. 

When a developer gains approval for a relatively high demand use especially when few properties have similar approvals, like gaining approval for the construction of a tavern, the zoning change can increase property value. 

Thus, when entitlements offer development options that are in high demand, then they may have added value.  Relatively few entitlement approvals, however, significantly enhance land value.  Appraisers often add the hard cost of attaining entitlements to the property value in the appraised value.  Since developers look to their equity position in the land when financing projects, entitlement value can often become a point of contention in appraisal reports.