diff --git a/pkg/registry/apis/provisioning/jobs/sync/changes_test.go b/pkg/registry/apis/provisioning/jobs/sync/changes_test.go
index 2618e8757e2..d2a31696688 100644
--- a/pkg/registry/apis/provisioning/jobs/sync/changes_test.go
+++ b/pkg/registry/apis/provisioning/jobs/sync/changes_test.go
@@ -315,6 +315,30 @@ func TestChanges(t *testing.T) {
 		require.Empty(t, changes)
 	})
 
+	t.Run("nested folder with space is created correctly", func(t *testing.T) {
+		source := []repository.FileTreeEntry{
+			{Path: "abc/dash.json", Hash: "abc", Blob: true},
+			{Path: "abc/nested folder/nested-dashboard.json", Hash: "xyz", Blob: true},
+		}
+
+		target := &provisioning.ResourceList{}
+
+		expected := []ResourceFileChange{
+			{
+				Action: repository.FileActionCreated,
+				Path:   "abc/nested folder/nested-dashboard.json",
+			},
+			{
+				Action: repository.FileActionCreated,
+				Path:   "abc/dash.json",
+			},
+		}
+
+		changes, err := Changes(source, target)
+		require.NoError(t, err)
+		require.Equal(t, expected, changes, "Expected diff to correctly include nested folder contents")
+	})
+
 	t.Run("error on empty path for non-folder resource", func(t *testing.T) {
 		source := []repository.FileTreeEntry{
 			{Path: "", Hash: "xyz", Blob: true},
diff --git a/pkg/registry/apis/provisioning/safepath/safe.go b/pkg/registry/apis/provisioning/safepath/safe.go
index cfe4d71abd5..b1ca34cc17b 100644
--- a/pkg/registry/apis/provisioning/safepath/safe.go
+++ b/pkg/registry/apis/provisioning/safepath/safe.go
@@ -25,7 +25,7 @@ const (
 // - Forward slash for path separation
 // - Dots for file extensions and current directory
 // - Underscores and hyphens for file/folder names
-var validPathPattern = regexp.MustCompile(`^[a-zA-Z0-9/_.-]+$`)
+var validPathPattern = regexp.MustCompile(`^[a-zA-Z0-9 /_.-]+$`)
 
 func IsSafe(path string) error {
 	// Check path length
diff --git a/pkg/registry/apis/provisioning/safepath/safe_test.go b/pkg/registry/apis/provisioning/safepath/safe_test.go
index cffdddb2e86..07831d70dbc 100644
--- a/pkg/registry/apis/provisioning/safepath/safe_test.go
+++ b/pkg/registry/apis/provisioning/safepath/safe_test.go
@@ -18,6 +18,11 @@ func TestIsSafe(t *testing.T) {
 			path:    "path/to/resource",
 			wantErr: nil,
 		},
+		{
+			name:    "character space",
+			path:    "path/to/my file.json",
+			wantErr: nil,
+		},
 		{
 			name:    "valid path with extension",
 			path:    "path/to/file.json",
@@ -65,11 +70,6 @@ func TestIsSafe(t *testing.T) {
 			path:    "path/to/file#.json",
 			wantErr: ErrInvalidCharacters,
 		},
-		{
-			name:    "invalid character space",
-			path:    "path/to/my file.json",
-			wantErr: ErrInvalidCharacters,
-		},
 		{
 			name:    "invalid character backslash",
 			path:    "path\\to\\file.json",