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Market Brief: Building and Construction Sector in West Bank and Gaza

The building and construction industry is one of the leading economic sectors in the West bank and Gaza. Home building makes up the bulk of investments. Although spending in this sector has somewhat diminished over the past four years, it is estimated that in 2002 total output in this sector amounted to $300 million. From a high of 5,803 new building licenses in 1999, the number came down to 1,913 at the end of 2002. The current number of housing units is estimated at 676,029 and is expected to reach 973,761 by 2010.

Over the past 30 years, the growth rate in the home construction sector lagged behind the 3.9% population growth rate of the Palestinian West Bank & Gaza. Demand for housing also grew after the return of expatriate Palestinians soon after the Oslo Peace Agreement and, in 2002, home construction amounted to 57% of total construction spending in WB/G. Construction of office buildings also increased, spurred by demand from new local companies that were set up, and the Palestinian Authority that started renting out premises for its different ministries and agencies.

Preferences for house ownership are for individual homes with large spaces, while living in apartment buildings is the least desirable. The average size of a Palestinian family in the WB/G is 6 persons. In Gaza however, because of scarcity of land, the trend has been to build high-rise office and apartment buildings.

The private sector leads the construction sector and according to Palestinian Central Bureau of Statistics’ figures; there are 348 enterprises in the construction contracting business that employ 3,500 workers. In the public sector, most projects are geared towards infrastructure and are financed by international donors mostly USAID. These projects mostly focus on the provision of potable water, sewage disposal and road construction.

Stone is used in construction in the WB/G because it is readily available and cheaper than wood. It is estimated that there are 297 quarries and 5633 stone and marble cutting operations in West Bank and Gaza. Also climatic conditions make wood less desirable as the winter season is relatively short, and mild to hot weather prevails throughout most of the year. All other materials are imported and the list includes; lumber wood used to make doors, furniture and kitchens; steel, cement, aluminum profiles, glass, heavy equipment and machinery used in construction, and elevators.

    Bethlehem Chamber of Commerce 1
    Bethlehem Chamber of Commerce