Gaza after three years of Hamas attack: What will it take to rebuild the territory?

Three years after the Hamas-led attack on Israel on 7 October 2023 triggered the war in Gaza, rebuilding the territory has emerged as an economic challenge on a scale rarely seen in recent history.

The latest international assessment puts Gaza’s recovery and reconstruction bill at about $71.5 billion over the next decade.

A joint assessment by the World Bank, United Nations and European Union estimated that $26.3 billion would be needed during the first 18 months to restore essential services, repair critical infrastructure and restart economic activity.

Against that, the US-backed Board of Peace said in May that it had received $17 billion in reconstruction pledges. But a pledge is not the same as money spent. The Board itself has acknowledged the need to close the gap between commitments and actual disbursements.

That leaves Gaza facing a huge financing gap even before the most difficult questions around security, governance, access and Hamas’ disarmament are resolved.

How much of Gaza has been destroyed?

A general view of destroyed buildings in Gaza, as seen from the Israeli side of the border, September 1, 2026. File/Reuters

The physical destruction is difficult to capture in a single number. The April 2026 Rapid Damage and Needs Assessment by the World Bank, UN and EU estimated $35.2 billion in direct physical damage across Gaza.

Another $22.7 billion represented economic and social losses.

Together, the war had generated an estimated $57.9 billion in damage and losses before accounting for the full cost of long-term recovery and reconstruction.

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Housing accounts for the largest share of physical damage. The assessment estimates damage to housing at about $18 billion, or 51 per cent of total physical damage.

Commerce and industry suffered another $6.35 billion in damage, transport $3.2 billion and water and sanitation $1.7 billion.

Satellite assessments show the scale of destruction is even more stark. UNOSAT found that, as of 16 June 2026, 201,290 structures, or about 82 per cent of all structures in Gaza, had sustained damage. Of those, 134,422 were classified as destroyed, while 13,848 were severely damaged and 28,096 moderately damaged.

The assessment also estimated that 328,627 housing units had been damaged. But rebuilding cannot begin simply by putting up new buildings.

Large parts of Gaza first have to be made safe. The World Bank, UN and EU estimate that more than 68 million tonnes of debris will have to be removed and managed, at a cost of more than $1.7 billion.

The operation will also have to deal with unexploded ordnance and hazardous materials. That makes debris removal one of the first major reconstruction projects in its own right.

Roads have to be cleared before construction equipment can move. Damaged water and sewage networks cannot be repaired efficiently without access. Families cannot safely return to neighbourhoods containing unstable buildings or unexploded weapons.

The scale of the challenge is already prompting dedicated international funding.

The UN Development Programme and the European Union launched a €15 million project in July for emergency debris removal, processing and reuse. Japan has separately committed $9.1 million for debris and solid waste management during 2026-27.

What exactly needs to be rebuilt?

A view of tents sheltering displaced Palestinians, during a windy winter day in Khan Younis, southern Gaza Strip, January 13, 2026. File/Reuters

Housing is the single largest requirement, but homes cannot function without electricity, water, sewage systems, schools, hospitals, roads and jobs.

The April assessment puts the housing requirement at $16.2 billion. Agriculture and food systems require another $10.5 billion, health about $10 billion, and commerce and industry about $9 billion. Together, those four sectors account for roughly 64 per cent of the total $71.4 billion reconstruction requirement.

Housing will be the most visible part of the rebuilding effort. The requirement includes temporary and transitional shelter, emergency assistance, debris clearance and the reconstruction of destroyed homes. Longer-term rebuilding is also expected to incorporate stronger construction standards.

But the rebuilding of Gaza’s food system could be just as important. Agriculture and food systems require $10.5 billion, including $7.5 billion during the first 18 months. The money will have to restore farms, agricultural infrastructure, productive assets, markets and storage facilities while reducing Gaza’s dependence on emergency food assistance.

The RDNA found that more than 95 per cent of agricultural infrastructure and 96 per cent of cropland had been damaged or rendered inaccessible during the assessment period.

Health is another major reconstruction challenge. The sector requires about $10 billion, with around $2.6 billion needed during the first 18 months to restore basic services. That includes temporary and field hospitals, trauma care, mental health services, nutrition programmes and rehabilitation of primary health centres. The longer-term requirement is to rebuild permanent health infrastructure and modernise the healthcare network.

Education requires another $4.7 billion, while water and sanitation needs are estimated at $4.24 billion.

Energy requires about $2.73 billion and transport about $1.54 billion.

Gaza also has to rebuild an economy

According to UNCTAD, 92 per cent of Gaza’s economic establishments have been damaged or destroyed since October 2023.

Construction activity in Gaza was down 99 per cent from its 2022 level in 2025. Agriculture and industry were each down 94 per cent.

Unemployment reached 78 per cent, while more than 90 per cent of the working-age population was not employed.

This creates a major reconstruction paradox. Gaza needs enormous investment to rebuild, but its domestic economy has almost no capacity to generate the capital required for that investment. UNCTAD estimates that Gaza’s GDP per capita stood at just $212 in 2025, about 17 per cent of its 2022 level.

Gaza’s contribution to the Palestinian economy has also collapsed. Its share of Palestinian GDP fell from 17.4 per cent before the war to less than 4 per cent in 2025.

How much money is available?

In February, the Board of Peace said members had pledged $17 billion for Gaza. The United States pledged $10 billion, while the United Arab Emirates pledged $1.2 billion. Saudi Arabia, Qatar and Kuwait each pledged $1 billion, with other members making smaller commitments.

On paper, $17 billion is a substantial amount. But against a $71.5 billion reconstruction requirement, it represents only about 24 per cent of the estimated bill. And even that comparison needs a qualification.

Pledged money is not the same as money that has been disbursed, contracted or spent. The Board of Peace has itself acknowledged that the gap between commitments and actual disbursement needs to be closed.

The funding architecture is centred on the Gaza Reconstruction and Development Fund, or GRAD. The World Bank acts as trustee, while the Board of Peace and the National Committee for the Administration of Gaza are responsible for the broader strategic framework.

The $2.45 billion programme is only a beginning

The latest major reconstruction proposal came in September. The Board of Peace unveiled a $2.45 billion, six-month recovery programme covering 66 projects. The programme includes infrastructure, health, education, shelter, food security, digital connectivity and economic recovery.

It is intended to move Gaza from emergency assistance towards reconstruction. But the numbers show how small the programme is relative to the overall challenge.

The $2.45 billion programme represents only about 3.4 per cent of the $71.4 billion ten-year reconstruction requirement. It also covers less than one-tenth of the $26.3 billion estimated to be needed during the first 18 months.

Reuters reported on 6 October that reconstruction remained limited nearly a year after the US-backed ceasefire framework was introduced.

Who will pay for Gaza’s reconstruction?

There is unlikely to be a single answer.

The United States is currently the largest identified contributor under the Board of Peace framework, with a $10 billion pledge.

The UAE, Saudi Arabia, Qatar and Kuwait are also expected to provide significant financing.

European countries, Japan and other donors are likely to finance early recovery, humanitarian assistance and infrastructure projects.

Multilateral institutions such as the World Bank can help structure grants and concessional financing and eventually support mechanisms designed to attract private capital.

Private investors could play a larger role later in sectors such as telecommunications, logistics, energy, housing, manufacturing and commercial infrastructure.

But private capital is unlikely to enter Gaza at scale while security, property rights, governance and access remain uncertain.

That means international donors will carry much of the initial financial burden.

Gaza itself has very limited capacity to finance reconstruction.

The territory’s economic collapse means that the reconstruction model will initially look more like a large externally financed post-war recovery programme than a conventional infrastructure investment cycle.

The cost could rise further

The $71.5 billion figure should not be treated as a fixed bill.

It is an estimate based on damage and recovery requirements at a particular point in time.

If further destruction occurs, the bill rises. If reconstruction is delayed, the cost of temporary shelter, humanitarian assistance and lost economic activity also increases.

Construction costs can rise as demand for materials increases. Import restrictions or disruptions to supply chains can add further costs.

The opposite is also possible. If debris is cleared quickly, basic services restored and local workers brought into reconstruction projects, some spending can begin generating income almost immediately.

Construction firms can restart. Small businesses can reopen. Agricultural production can return. Banks can begin financing economic activity again. That would turn reconstruction from a pure cost into the foundation for economic recovery.