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Has Hong Kong lost its center of vice?

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Once a hotbed of sex workers and drug peddlers, Chungking Mansions, a ramshackle high-rise building in the heart of Hong Kong's shopping district, is no longer the glossy city's notorious core.

Built in the 1960s, Chungking Mansions has 17 floors of guesthouses and small businesses, run by people from all corners of the globe selling everything from fake electronics to gems. Long a hub for merchants from the developing world keen to turn a profit in Hong Kong, it's said that at least 20 percent of sub-Saharan Africa's mobile phones passed through Chungking Mansions first. Meanwhile, the drugs and prostitution that also made up a big chunk of business activity gave Chungking a seedy image at odds with Hong Kong's largely safe and sanitized aura.

But moves have been underway for the past decade to clean up the building's image.

"Chungking Mansions as a center of vice, that doesn't ring true anymore," noted Gordon Mathews, professor and chair of the Anthropology department at the Chinese University of Hong Kong, who first began exploring the building in 2005.

"My research interest was sparked because people thought it was a scary place." After living there over a four year period, he wrote a widely-acclaimed book "Ghetto at the Centre of the World" that detailed the building's intricate business networks.

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So while backpackers and budget travelers continue to flock to the building for cheap lodgings—nightly prices start from $30, according to a search on Hotels.com—the sale of fake goods and illicit services is on the decline, Mathews explained.

"The peak of the counterfeit phone trade fell after the smartphone era. iPhones are cheap enough and copies are bad enough so nobody wants to buy a copy phone. Wholesale businesses aren't dealing well overall since that trade has moved to China."

Prostitutes and hashish vendors, who freely hawked their wares in the early years of the new millennium, have stopped actively soliciting in the building because buyers now have other options, such as the Tsim Sha Tsui or Wanchai neighborhoods, to find vice, Mathews told CNBC.

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"All kinds of trading activities still go on but the content has just changed. First it was clothes, then mobile phones, now it's turning more to guesthouses and restaurants since they are the most in demand," he said.

Salina Lam, who has been chairwoman of the tower block's owners association for more than two decades, told the South China Morning Post earlier this year that she had hired better security staff and installed 400 surveillance cameras to deter crime.

Now that it's no longer dangerous, locals consider Chungking Mansions a sort of mini-United Nations, a melting pot of commerce and culture that makes it one of the city's top cultural icons, said Lee Ho Yin, associate professor at Hong Kong University's Faculty of Architecture.

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"Guest houses had little regulation in the past, which used to drive the sex trade but now, all are required to be registered and provide records so that's helped the building's reputation," he told CNBC.

Police made high-profile arrests at Chungking of people staying in Hong Kong beyond their visa limits, which also helped deter illegal activities, Lee added.

So, what lies ahead for the city's most infamous building?

Lee expects the building will eventually be demolished, but not in the near future.

"The fragmented ownership of the building means it will take a long time for real-estate developers to acquire the more than 1,000 units. I'm sure many developers have given up at this point."