I wouldn't accent that wall or the niche (to dated) but if you must then paint the wall and niche all the same color. I would paint it the same color as your other walls and make it disappear and focus on making the fireplace surround and mantle that the focal point. Or stone the whole thing up to the ceiling. Maybe even consider doing away with that niche. Serves no purpose..

I agree the niche serves no purpose. Thanks for your input.

what is your budget? I think it would change and update your living room to do a tile application of fireplace surround and take it all the way up to the ceiling. It would also work to do a painted wood surround to level of windows and tile up from there. I think some texture is needed there. Good luck.

Agree to loose the niche. What is the style of the home or what style do you intend to bring into it? Kind of looks like a mix-up of traditional and Spanish mission? What is the flooring going to be? At first cut, I think I would redo the fireplace surround and beef it up substantially due to the size of the height of the ceiling. It is off balance. Tall ceilings always make people think the room is large, when the actual footprint of the floor is not that large. This room looks familiar to me. Have you posted before?

another vote to cover niche and consider tile or stone on fireplace

What a great place to display a large format art piece, completely over the top of the niche. Personally, I would spend the money on fabulous art and just hang it over the niche rather than pay to have the niche redone