This sounds strange in English. Would be better with "This place is far away."
If it was far wouldn't it be वह?
Absolutely correct, unless you just arrived there from a distant location.
I dont know if this is right, but I thought of it in context of looking at a map or list of places. Maybe, for example, if I were trying to choose a place to eat with a friend and one of them is 20 miles away, I might use this.