The Palestinian territory is in the midst of a construction boom, more than three years after a major Israeli assault that left much of the territory in ruins. Since building materials haven't been allowed in legally since 2007, items like cement have been smuggled in through tunnels from Egypt.

A Palestinian youth destroys stones for use in construction in Gaza City on Jan. 23. Despite restrictions on imports, including building material, the area is going through a construction boom. Mohammed Abed | AFP/Getty Images A Palestinian youth destroys stones for use in construction in Gaza City on Jan. 23. Despite restrictions on imports, including building material, the area is going through a construction boom. Mohammed Abed | AFP/Getty Images A Palestinian youth destroys stones for use in construction in Gaza City on Jan. 23. Despite restrictions on imports, including building material, the area is going through a construction boom. Mohammed Abed | AFP/Getty Images A Palestinian youth destroys stones for use in construction in Gaza City on Jan. 23. Despite restrictions on imports, including building material, the area is going through a construction boom. Mohammed Abed | AFP/Getty Images A Palestinian youth destroys stones for use in construction in Gaza City on Jan. 23. Despite restrictions on imports, including building material, the area is going through a construction boom. Mohammed Abed | AFP/Getty Images

A crowd of onlookers has gathered around the oily black tarmac recently being laid down in a section of downtown Gaza City. Gaza's potholed streets are finally getting a makeover, and infrastructure upgrades like this new road are still a novelty for residents.

The overseer of the project says that before, they couldn't get enough material to fix the road. But now, everyone is building.

Despite continuing unrest and restrictions on imports to and exports from Gaza, the Palestinian territory is in the midst of a construction boom, more than three years after a major Israeli assault that left much of the territory in ruins.

Smuggling Supplies To Meet Demand

Building materials haven't been allowed into Gaza legally since the militant group Hamas took over the territory in 2007. Israel maintains it doesn't allow them in because they could be used for military purposes.

Instead, the materials come in illegally from Egypt, through about 600 smuggling tunnels in the bustling Gaza border town of Rafah.

Alaa Hamoud smuggles paving stones and cement in his tunnel. He used to bring in foodstuffs, but since Israel eased restrictions on food imports, he converted his tunnel to accommodate construction materials, like most other smugglers in Rafah.

There is a huge, pent-up demand, he says. Many houses and buildings were damaged or demolished during the Gaza war and they are just being rebuilt.

The rebuilding is providing much needed work. In Gaza City, Akram al-Draimli is one of the men working on building a new family house. He says he had no work for years. But now, he says, there are more people getting married and more babies being born, which means people need new homes. He says there is more demand for skilled workers than there is supply.

Omar Shaban, a Gaza-based economist, says there is a need for more than 80,000 units of housing in Gaza.

"In the past five years, there were more than 250,000 newborns, which means that 250,000 people become adults," he says. "We have in Gaza around 40,000 marriage cases every year, which means we need a new flat for these new marriages."

More than 500 apartment blocks are going up in Gaza. Shaban says wealthy individuals from the Gulf region are actually investing in Gaza's construction sector.

Buildings With No Lights

But this is not development, Shaban warns.

"In Gaza we have an economy with one leg; there is a boom in construction while other sectors are paralyzed," Shaban says.

Israel allows only limited exports from Gaza to the West Bank, which is where most of Gaza's exports were previously sent. Unemployment is still rife, and hundreds of thousands depend on food aid.

There are also crippling power outages. Though electricity shortages in Gaza are nothing new, they've become critical lately. Hamas recently signed an agreement to increase Egyptian supplies of diesel fuel to Gaza's sole electricity plant.

The problem is that cars in Gaza use the same fuel, and there isn't enough to go around. A man who gives the name Mohammed pours black market diesel fuel into his car. It's expensive and scarce.

We can't find it anywhere, he says. The fuel he is using had been stored in his house; he uses it only for emergencies.

Most gas stations in Gaza are actually shuttered.

People have to walk to get to and from work, or linger on street corners desperately waiting to catch a lift.

A student named Hassan and his friend have just come from the university and are trying to flag down a passing car.

But he says the cars are not moving around, and the ones that do are crammed full of people.

'Under Four Governments'

One of the conundrums of Gaza's economy, Shaban says, is that it operates at the whim of its neighbors. Policies in Israel, Ramallah in the West Bank and Egypt decide if it will thrive or die.

"In Gaza, we are living under four governments. We have Hamas government, we have Egypt sometimes, we have the Palestinian Authority, who has some say, and we have the Israeli government," he says. "So we are so lucky."

There is no escaping the sarcasm in his voice. [Copyright 2012 National Public Radio]