Could you clarify if the green rug is inside the building or outside, exposed to the elements. Is the brick the terrace or the brick plus the green rug the terrace?

Id probably use that area for a small grill. id also put your couch on the wall the chair is so it opens up the walkway a bit more.

I'd fill it with plants. Equally, you could use it for storage or for hanging out laundry.

Thank you all for your answers :-)

@Yvonne Martin: the green rug is outside the building, and no roof is covering it.

@wsea: A grill isn’t an option because of the neighbors’ policies.

@lisedv: The length of the area marked in the photos is 2 meters and the width is 1.1 meters — this refers to the part covered with wooden decking.

I wouldn't put seating there that is supposed to be a regular part of the set on the green rug. Behind that wall makes it awkward. Some plants would be lovely, I would likely have a garden there. If you can and like it, a clothesline would be nice there. It looks narrow, but maybe a nesting table with stool(s) could fit there. Provide some extra table space and storage for a couple extra chairs if you need them sometimes.