There are several problems with that snippet. I recommend you learn bash's syntax a little better before writing scripts in it.
Anyway, if you want to edit a file, you want a file editor. sed is not a file editor. I believe this will do what you want.
read -p "Enter the ip address: " ipnumber
ed -s application.properties << EOF
What that ed script says is:
/:@/c - on the first line containing
:@, change the line with everything following until a line containing only a
w to write the changes to the file.
See http://wiki.bash-hackers.org/doku.php?id=howto:edit-ed for help with editing using ed, and http://mywiki.wooledge.org/BashGuide to learn bash.
sed can be used to achieve the same, but it can't edit files, it can only be used to create a new file.
Here sed will output the file with the changes applied. You can redirect to a new file, then move that file over the old one. GNU sed also has a non-standard
-i option that does the last part transparently. GNU sed also doesn't require you to have that newline in the sed script.
# GNU sed
sed -i "/:@/c connection.url=jdbc:oracle:thin:@$ipnumber:1521:billz" application.properties
Note that the ed will only replace the first line that matches the regex while sed will replace all lines matching that regex.