diff --git a/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/PropertiesBuildService.kt b/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/PropertiesBuildService.kt
index 616ee8610b4..cfb7e304238 100644
--- a/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/PropertiesBuildService.kt
+++ b/libraries/tools/kotlin-gradle-plugin/src/common/kotlin/org/jetbrains/kotlin/gradle/plugin/PropertiesBuildService.kt
@@ -75,7 +75,7 @@ private class PropertiesManager(private val project: Project, private val localP
             }
             project.provider {
                 // FIXME(KT-62684): We currently don't memoize extraProperties as they may still change, we'll fix this later.
-                project.extraProperties.getOrNull(propertyName) as String?
+                project.extraProperties.getOrNull(propertyName) as? String
                     ?: valueFromGradleAndLocalProperties.call()
             }
         }
diff --git a/libraries/tools/kotlin-gradle-plugin/src/functionalTest/kotlin/org/jetbrains/kotlin/gradle/unitTests/PropertiesBuildServiceTest.kt b/libraries/tools/kotlin-gradle-plugin/src/functionalTest/kotlin/org/jetbrains/kotlin/gradle/unitTests/PropertiesBuildServiceTest.kt
new file mode 100644
index 00000000000..472609b9d04
--- /dev/null
+++ b/libraries/tools/kotlin-gradle-plugin/src/functionalTest/kotlin/org/jetbrains/kotlin/gradle/unitTests/PropertiesBuildServiceTest.kt
@@ -0,0 +1,45 @@
+/*
+ * Copyright 2010-2023 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
+package org.jetbrains.kotlin.gradle.unitTests
+
+import org.jetbrains.kotlin.gradle.plugin.PropertiesBuildService
+import org.jetbrains.kotlin.gradle.plugin.extraProperties
+import org.jetbrains.kotlin.gradle.util.buildProject
+import org.jetbrains.kotlin.gradle.util.registerMinimalVariantImplementationFactoriesForTests
+import org.junit.Assert.assertEquals
+import org.junit.Test
+
+class PropertiesBuildServiceTest {
+
+    @Test
+    fun `testPrecedenceOrder`() {
+        val project = buildProject()
+        project.extraProperties.apply {
+            set("a", "extra")
+            set("b", "extra")
+            set("x", 1) // Test the case where extra property is not a String
+        }
+        // TODO: Find a way to test Gradle properties (it seems that more setup is needed for Gradle to pick up the contents of
+        //  `gradle.properties` in this test).
+        project.projectDir.resolve("local.properties").writeText(
+            """
+            a = local
+            c = local
+            x = "local"
+            """.trimIndent()
+        )
+
+        project.gradle.registerMinimalVariantImplementationFactoriesForTests()
+        val properties = PropertiesBuildService.registerIfAbsent(project).get()
+
+        assertEquals("extra", properties.get("a", project))
+        assertEquals("extra", properties.get("b", project))
+        assertEquals("local", properties.get("c", project))
+        assertEquals(null, properties.get("d", project))
+        assertEquals("\"local\"", properties.get("x", project))
+    }
+
+}