"그것은 저쪽에 있습니다."
Translation:That is over there.
I would argue that the "over there" part in this sentence seems more closely related to "저기". You would also use these particles (여기, 거기, 저기) when saying "The restaurant is here/there/over there" instead of using the -쪽/-편 particle, as it would actually mean direction. "The restaurant is this way/that way". At the end, I would say "That is over there" like this: 그것은 저기에 있습니다. Seems more logical. No?
그것 - that/it.
저쪽에 - in that way/direction/side. Or basically "over there".
있습니다 - is/exists.
In this case the first "that" is not referring to something near the listener but rather "that" which you are referring to. E.g. "Where's the library?" --> "That [ponders and looks around]... is over there."
You could also translate this sentence as "It is over there."