Australia’s national capital could be the next market to see an influx of offshore money into its commercial real estate market.

Global property consultancy group Knight Frank has improved economic conditions will help the commercial market in Canberra push into positive territory through 2016.

“Recent positive economic signs in Canberra are expected to help underlying market fundamentals,” Knight Frank associate director institutional sales - Canberra Nic Purdue said.

“This includes a far more stable vacancy rate, stable incentives and forecast rental growth – all signs that the Canberra commercial market has reached the lowest end of its cycle,” Purdue said.

The improvement in those market factors, along with the fact that the public service in Canberra provides attractive, long-term tenancy options will prove a drawcard for global capital, especially that which is flowing out of Asia.

“The current wave of Asian capital is looking to diversify away from Australia’s core markets and into higher-yielding regions, such as Canberra,” Purdue said.

“With some volatility in global markets, Canberra is increasingly being considered as a safe haven within the context of the wider Australian market place.

“Australia remains attractive for offshore investors who are drawn by the low Australian dollar, cost-effective borrowing and government stability. And should the global volatility continue there will be a case for the RBA to keep rates on hold, adding to the attractiveness of Canberra as a market.”

Earlier this month, CBRE revealed yields in some sectors of the commercial real estate market in Sydney and Melbourne fell drastically over the end of 2015.

While much has been made in recent years of Chinese money being directed to real estate in Australia, Purdue said interest in Canberra’s commercial sector is set to come from a number of countries.

“We are already receiving increased interest from Asian countries including Korea, Singapore and Malaysia.

“Canberra’s commercial sector hasn’t yet seen the levels of demand from Chinese investors that other capital cities have seen, but that could also change.”

Though improved economic and market factors have increased Asian interest in Canberra’s commercial market, especially for office blocks and hotels, Purdue said a new physical connection between Canberra and Singapore could soon see even more offshore money flow to the city.

“As reported in the media over the past week, if Singapore Airlines does create a direct flight route between Canberra and Asia, this will continue to build the case as an investment destination for Asian investors.”