Its not a gross ownership model. These things are set up this way because different groups of people will pay different amounts of money for different bundles of things that are taxed at different rates/advantages depending on their use. The land lease has scheduled payments for the next ~100 years, long beyond the time horizon of DCFAs that anyone is doing for investors. Many buildings in NYC and elsewhere have this ownership model. Why should a land owner be into construction and and why should a land owner be exposed to the volatility of commercial real estate rents if they don't need to be.
It is very common to have leasehold properties in Hawaii, usually larger buildings for residential purposes, but sometimes also single family homes and commercial buildings. Usually, they are owned by native organizations, which do not want to sell the land (for obvious reasons given their history) but want it to go to productive use.
It isn't a big deal here, and most locals support leaseholds because it allows the natives who had most of their land stolen to hold onto at least a bit of it, while still utilizing what little space they have on the islands.
Imagine that you own an empty lot. You could build something there yourself, but you don't want to bear the risk and manage it because you've never done it, and you don't have funds to do it. Why wouldn't you offer somebody else to do it for a fixed monthly fee?
On the other hand, imagine that you're a developer. You know how to build and sell, you've been in the business a long time and confident about your ability. But you don't have enough money to buy a piece of land AND build. Why wouldn't you rent land instead and then pocket the profits?
Kinda? I mean the name "landlord" directly traces back to the feudal era. The land owner could have a mortgage too in some cases and depends on that income to pay as well as taxes and insurance. The building owner is usually subleasing or selling subunits within the building so it's really just a tiered chain of ownership and leasing with various trade-offs in capital efficiency, risk, etc.
Very common model in Germany as well, called Erbbaurecht. The land is usually owned by the Catholic Church or the city itself. They then give you a lease valid for 99 years and after that time the land falls back to them.
