After adding watch Extention in ios/Runner.xcworkspace flutter run fails with below build error

Steps to reproduce

1. flutter create watch_test
2. cd watch_test & flutter run - App successfully launches in iOS simulator
3. Now open ios/Runner.xcworkspace and add new target as watch app extension for iOS app
4. flutter run will give error

Error log

note: Using new build system
note: Planning
note: Build preparation complete
note: Building targets in parallel
error: unable to resolve product type 'com.apple.product-type.watchkit2-extension' for platform 'iphonesimulator' (in target 'watch WatchKit
Extension' from project 'Runner')
error: unable to resolve product type 'com.apple.product-type.watchkit2-extension' for platform 'iphonesimulator' (in target 'watch WatchKit
Extension' from project 'Runner')
error: unable to resolve product type 'com.apple.product-type.application.watchapp2' for platform 'iphonesimulator' (in target 'watch' from project
'Runner')
error: unable to resolve product type 'com.apple.product-type.application.watchapp2' for platform 'iphonesimulator' (in target 'watch' from project
'Runner')
warning: duplicate output file '' on task: RegisterExecutionPolicyException /Users/raeeskattali/Downloads/w_test2/build/ios/Debug-iphonesimulator (in
target 'watch' from project 'Runner

Other details

• Tried on both stable & master branch
• WatchOS targets Supported Platforms is watchOS & Build Active Arch only YES
• Trying from M1 Macbook