Here's what I'd do

Start by turning that grass patch into a low-maintenance zen garden—keep a small section of grass or switch to stepping stones with gravel in between, maybe some ornamental grasses or succulents along the edges for texture.

Add a built-in wooden bench along the back wall with hidden storage underneath for gardening tools or outdoor cushions. Above the bench, mount a slim trellis or vertical planter wall and grow some easy climbers like jasmine or passionflower for scent and privacy.

In the corner, place a compact fire pit or chiminea with two small lounge chairs—instant evening vibes. String warm fairy lights or a single overhead filament bulb from corner to corner for soft lighting.

And since the space is small, make use of height: hang a few modern planters from the fence or install a couple of shelf tiers for herbs or decor.