short answer, it depends.
Yes, it is harder to sell something on leased land. Some buyers don't even consider it, so your buyer pool is smaller. Land leases can be long enough that it is OK to purchase on a land lease (99 years for example). From an investors standpoint, it will depend on the situation, and if the only option has a land lease, then you take the land lease. It could also reduce the amount of investment for a developer, so that could be looked at as an incentive when there is a limited amount of capital available for a particular project. Eliminating the purchasing cost of the land leaves that much more capital for hard / soft costs upfront. If you're worried about it, you can negotiate a "Right of first Refusal" into the deal. That way, if the property is EVER sold (runs with the property) you (or whomever has inherited your right) get the FIRST OPTION to purchase the property at the same exact terms as were accepted by the owner. You don't have to exercise your option either. So, again. I guess it all depends :D
Feb 1, 2012