A one city works challenge worls surprisingly well! You are exiled to your home city (Gorn or Frostford) and the other cities will not trade with you. This means you cannot enter the other slaver's guilds, buy from the other merchants, buy spells from the mage guild, buy portal stones, send your slaves to work outside your city, etc. You can still talk to people in those cities for quests and take public transport home. You can trade at Shaliq village. If you get blocked by a cheap shop bought item that will require high level random chest loots to solve (basic liquid for Melissa's youthing potion, a slave wanting lacy underwear) then you can buy an item for that use only. I'd also suggest playing this Iron Man with no rollover of the slave contracts by extra reloads (as that is an exploit for infinite money, essentially).
This scenario works well as mansion points are important and you need to make better decisions. You get to use all the tools in game that you usually bypass with easy magic. Some parts of the game even look better balanced than in the full game.