This site had a couple of challenges that defined the final material selection and consequently the final end result.

Firstly, the house is at least 50 years old and the structure was not strong enough to hold up any heavy paneling and the ceiling had cracks that we did not want to aggravate any further by adding unnecessary load on the slab.

Secondly, every surface of the space was riddled with untreatable dampness and hence, any paint or wall covering we chose must be able to hold up against it, hide the damaged surfaces and not get damaged or rotten itself.

So essentially. no damp-proofing, paint, or laminate paneling would work here. 

Conclusively, we decided to go with PVC panels in a warm palette to brighten the space and make it cozier.

To add visual interest in the space we chose to go with an emphasis on the TV panel, the heart of the functionality of this space,  by adding texture with 3d tiles and edge lighting.

Here's the final renovated space -