Yes, strangely enough there is a number of whorehouses in Pyongyang! And guess what: they are state-owned!
Before I took off for Pyongyang, I loaded my laptop with porn, prepared to jerk-off for couple of weeks, knowing that it's an extreme case of a police state. However, after I explored the city a bit, I found couple of clubs, which are designed to cater only foreigner and the top strata of their party cadres. All of them are located in hotels.
The first, and the oldest one is a state-owned one, and it pretty badly organized. It was located next to the Pot'onggang hotel, in the place called Ansan club. It's something like a restaurant, leisure club and a semi-official brothel. However, this brothel works on only on temporary basis, so it is open for a period of two or three months, two or three times a year, and the whores are not Koreans, as one might expect, but most of them are from the Phillipines or Thailand.
~~There are two other hotels, considerably larger than a previous one, Yanggakdo Hotel and Koryo Hotel. In these hotels, you have foreign owned casinos, with saunas and massage parlors; I guess most of the whores are Chinese, but maybe there are some Koreans as well, who knows. I was pretty drunk, and after I spoke to the manager, he politely and professionaly led me to "karaoke bar", where there were 4 chicks waiting for customers. I picked up one, she barely spoke English, but I assume that she was Chinese. The service itself nothing special, and VERY expensive, it costed me more that 300US$, but what a fuck, it's Pyongyang, and it was the most exotic place for sex I have ever visited.
Everything is ran by hotel management, and the service is, as I said, lousy compared to the price, probably because they don't have competition, so they don't care much about customer satisfaction. Outside hotels there is nothing, but I mean it, absolutely nothing except dull concrete monuments. Concerning the ordinary women on the street, you cannot approach them, since if you are North Korean, you need a special permission to speak with foreigners. Besides that, their attire is so crude and unsexy, it's not even funny. Most of them wear outdated suits, with thick wool stockings, usually red or white, so you cannot see their legs, let alone some other, more intimate parts of the body...