This question already has an answer here:
Is it possible to use an application page, residing in the
_layouts folder, as the default Welcome page of SharePoint?
According to the
WelcomePage property, only Site Pages can be used as the welcome page. A hack around would be to create a dummy ghostable Site Page, that basically redirects to the application page that I want to display as the welcome page. However, I wanted to avoid this, as I don't really need a Site Page for this particular scenario.