Apple's new iPhone 5 is selling well in the Gaza Strip despite inflated prices, reaching Palestinians via smuggling tunnels even before it comes to Israel.

The cutting-edge smartphone is being snapped up for almost double what it costs in the United States, its price jacked up by middlemen on its circuitous delivery route from Dubai via tunnels linking the blockaded territory with Egypt.

The iPhone 5 will not be available until December from mobile operators in tech-mad Israel, which along with Egypt maintains a partial blockade of Gaza to prevent the entry of anything that could be used for military purposes.

But the phones have been available for a couple of weeks in Gaza and they were on display on Monday in three independent mobile stores in a one-block radius in downtown Gaza City.

Prices ranged from NIS 4,500 for the 16-gigabyte model to NIS 5,700 for 64 gigabytes.

"I ordered 30 and I've sold 20 so far," said one dealer. "We can order as many as we want. But most people are waiting for the price to go down. They're pretty expensive."

Apple has no store or official dealership in Gaza.

For the 1.6 million Palestinians living in Gaza, transport and handling costs for all kinds of imports are inflated by bribes paid in Egypt to facilitate the smuggling, and Hamas adds sales tax at its end of the supply chain.

But despite the hefty mark-up and high costs in an aid-dependent territory with a crippled economy, market forces prevail in Gaza as they do everywhere.

"There are always some people prepared to pay whatever they must just to have the latest thing," a dealer said.