Something very similar to that actually existed in Hong Kong at one point. It was called the Kowloon Walled City, but it was demolished in 1994. When it existed, it was the densest place on earth (by far). 50,000 people lived in an area of 6.5 acres.
There's some longer documentaries on it, but here's some footage. There was actually a lot of industry, and they'd supply a lot of the high-end restaurants with noodles because they could produce them cheaply with no regulations (and with rats running around).






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