Hi I would put in a double sided island bench....this is cupboards back and front...Normally cupboards are 600mm deep so that would make the bench top 1.2m wide...that is how wide mine is and I love it....such a great work area. The high bench top gets it the way really yes even if there is a sink....you can work on the other side... and then you have double the cupboard space as well as double the bench space. hope this helps...Robyn

Thanks for the suggestions! I was thinking of moving the fridge to the empty back wall and creating a small island with the sink. Do you think that would work?

Paper towel holder should be moved to other side. I'd keep your kitchen "triangle" it's a more workable area as is. The mirror over the sofa could go on the dining room wall. hang it with bottom level with other picture. It will give it depth and light refection. Paint that wall (or paper or stencil )a darker colour for an accent wall. Is dining set big enough to have two chairs on each side and place it the other way and still have room to get around it? It will make it look bigger. If you can that gives you room for a buffet as well on the accent wall.
Pull your sofa out about 3-4 inches from the wall and place the front feet on the rug. Creates the illusion of more space and defines the area. Black pillows on the sofa to tie in with other furniture. Place behind existing pillows. Small pics could hang on the wall outside the kitchen to the left of the bar area. I am long winded tonight aren't I . Sorry. I love to design:)

Would you consider lowering the bar height to counter height? To my eye the tall bar is a cheat trying to make it look like a separate room. Lowering it will open up the space putting everything on the same level. It sounds counter intuitive but it will work. Right now half of your fruit bowl, half of the towel holder and half of the faucet are all showing. It looks messy and blocks the view of the kitchen. Don't move appliances, that won't work. In a small space paring down to the essentials is imperative..

You could do that ...would give you more space that is for sure... I would personally like to keep it in that part of the kitchen for access to the sink etc....but it could work either way...

Sorry, I didn't read properly...I would leave the sink where it is due to the fact that it is really expensive to move because of the plumbing....better to leave it where is....

Quick update! We decided to expand the kitchen and put the dinning room table in the middle. We love it.