* Real estate prices up 30 pct in 2 yrs

* Construction boom sign of West Bank growth

* Israeli curbs on Palestinian building fuel high prices

* Sector is drawing some Gulf investment

By Mohammed Assadi

RAMALLAH, West Bank, Aug 2 (Reuters) - The din of
earth-movers levelling the hilly terrain of Ramallah for
construction is unremitting as modern buildings shoot up all
over the West Bank city.

Once a mere village on the outskirts of Jerusalem, Ramallah
has seen its population double in the last 10 years and land
prices surge, in part due to the fact it falls within the 40
percent of the West Bank where Palestinians can build without
Israeli permission.

The Ramallah construction boom is one of the most obvious
signs of West Bank economic growth estimated at an annual rate
of 8 percent -- which Palestinian policymakers attribute to
relative stability and Western donor support to the Palestinian
Authority.

Israel has occupied the West Bank since 1967.

But unlike Gaza, where Palestinians are packed into a slowly
crumbling city, Ramallah has no shortage of concrete and steel
reinforcing rods -- construction materials barred from the Gaza
Strip by an Israeli blockade, on the grounds they can be used
for military purposes by the enclave's Islamist Hamas rulers.

Ramallah has swallowed the neighbouring town of El-Bireh and
is home to 83,000 Palestinians. As traffic queues grow longer,
the Palestinian Authority is expanding the roads to cope.

Developers say property prices have risen by 30 percent in
the last two years. Buyers expect prices to go higher, though
accurate price surveys do not exist.

A home in Ramallah is now twice as expensive as in Nablus,
an industrial city 45 minutes by car to the north.

But that did not stop Ibrahim Sowan, a plastic surgeon from
Nablus, from deciding to buy in Ramallah.

"I know that it is expensive, but if I want to sell it the
price may be even higher," he said. "I have a clinic in Ramallah
so I bought an apartment and I plan to settle here," he said.

"TREMENDOUS DEMAND"

Israel says it has helped revive the Palestinian economy in
the West Bank by removing checkpoints, movement restrictions
imposed during the Intifada, or uprising, that erupted in 2000
in the Israeli-occupied territory.

The Intifada partly explains why Ramallah has grown so
rapidly. Many Palestinians who worked here but lived elsewhere
moved in to avoid the hassle created by Israeli checkpoints,
which in the worst days of the violence could seal off a
Palestinian town or village for weeks.

Today, Ramallah's buoyant economy continues to draw
Palestinians from other West Bank towns where jobs are fewer.
The checkpoints that still generate lengthy traffic queues are
those that guard access to Jerusalem.

Ramallah's built-up area has grown five fold since the peak
of Israeli-Palestinian violence in 2002, said Ahmad Odaly, head
of the Palestinian Engineers Union.

"There is tremendous demand for apartment buildings," he
said. An apartment in a wealthy area today costs $200,000.

Israel exercises complete control over 60 percent of
building in the West Bank under interim peace agreements
concluded in the 1990s with the Palestinian Authority.
The peace process has yet to produce the state the
Palestinians aim to establish in the West Bank, the Gaza Strip
and East Jerusalem, where they hope to set up their capital.

Until it does, Ramallah remains the de facto capital and
seat of Palestinian government in the West Bank.

A new, $500 million mortgage fund operated by the
Palestinian Authority's Palestine Investment Fund (PIF) is
expected to give a further boost to the residential property
market. It is set to start lending this year.

Construction activity goes beyond the residential sector.
The PIF last week began work on a $400 million commercial centre
comprising 13 towers which will be some of the tallest in
Ramallah.

The Ersal Centre has drawn investment from a Saudi Arabian
firm, The Land Holding, which has a 10 percent stake. It is not
the only Gulf Arab firm investing in Ramallah and its outskirts.

The Qatari Diar Real Estate Investment Company has a stake
in Rawabi, a completely new town being constructed in the hills
outside Ramallah at a cost of $800 million.

Some developers see demand growing for several years to
come. "I could hardly find a plot of land to buy," said Isam
Rimawi, a developer.
(Editing by Tom Perry)