With all things being equal, I typically advise my clients to purchase fee simple as opposed to leasehold property here in Hawaii. Not all leasehold purchases are that bad however. You always want to look at the terms of the lease.
Executive Centre in Downtown Honolulu is an example of a long term lease expiring in 2053
One positive thing I read about recently in a Naitonal Association of Realtors publication was that owning leasehold property may not be that bad after all. According to the article, the Taxpayer Relief Act of 2012 offers some tax relief for owners of leasehold property. Owners were allowed to depreciate improvements on a straight line basis for 15 years through 2011. The reilef act now extends that ability through 2013 and also made it retroactive to 2012.
What does this mean? If you're a high income earner, it could provide some depreciation to offset your income. In addition, leasehold property can potentially cash flow better than fee simple ones and they also offer a signficant discount in the purchase price. I would advise discussing your own situation with your CPA to see whether or not investing in leasehold property is right for you. In addition, every leasehold property on this island most likely has a different term to the lease, so I also advise working with a good Realtor to provide you with the terms of the lease so that you know what you are getting in to.