It was an issue with global dependencies conflicting with local ones, as well as the old build (set to incremental mode) conflicting with the new property generation. Did the following to resolve the issue:

• If nest cli is globally installed, manually upgrade it: yarn global upgrade upgrade @nestjs/cli, or with npm (npm update -g @nestjs/cli)
• Upgrade local service nest to most recent version: nest update
• Add the following to your nest-cli.json:

  "compilerOptions": {
    "plugins": ["@nestjs/swagger/plugin"]
  }

• Remove your local dist folder (or do a yarn build)
• Start the server with the nest cli commands (i.e. nest start or nest start:dev)

I figured it out, leaving the question if somebody has similar issue.

The tsconfig file has emitDelcarationOnly: true configured causing the error above.

What is kind of weird is, that without the plugin, the compilation works as expected and the output is main.js file in dist directory. However, once the plugin is enabled through

new NxAppWebpackPlugin({
    // ...options
    transformers: [
        {
            name: '@nestjs/swagger/plugin',
        }
    ]
}),

once must also change the tsconfig file to contain "emitDeclarationOnly": false. Why is the case I have honestly no idea.

Seems like there is already an open BUG #2147 for the same issue and there are multiple solutions presented in the long on going discussion but none of them are full proof and some have side effects. Nonetheless I would highly recommend you to read discussion and monitor it.